PICC P&C: Combined Ratio Continues to Recover, Margin Outperforms Peers

PICC P&C’s IFRS-17-based total revenue and net profit in the first quarter grew 9% and 22%, respectively, year on year, with its underwriting margin outperforming peers. Notably, the combined ratio, or CR, recorded a solid improvement of 0.9 percentage point to 95.7% against the year-ago period. Performance is on the high end of prior management guidance. As results were largely in line, we retain our fair value estimate at HKD 11 per share. The shares have rallied about 20% since late March when management provided very positive margin guidance for 2023. Trading at 0.8 times our forecast 2023 book value, the stock remains undervalued and we continue to like PICC P&C for its strong fundamentals and dominant position in an oligopolistic market. The company commanded about 33% of total premium and 50% of industry profit in 2022.