Ping An is set to release its 1H26 results on Aug 20 (Thu) post-market. We estimate Group OPAT at RMB83.3bn (+7.2% YoY), implying a robust 2Q26 increase of 6.8%, (vs. +7.6% in 1Q26). We expect Group NPAT to reach RMB83.8bn (+23% YoY), slightly above OPAT, reflecting positive short-term investment variances from the 2Q equity market rally (i.e. CSI300: +12% in 2Q26 vs. -4% in 1Q26/+1% in 2Q25) and revaluation gains on the conversion value of the outstanding convertible bonds.

Key drivers for this solid 1H26 performance include 1) L&H OPAT expected to grow ~3% YoY (CMBI est) benefiting from a more stable interest rate environment in 2Q26 (i.e. 10YR government bond yield down 5.7bps, vs. -17bps in 2Q25), which should aid new business contractual service margin (NB CSM) growth. This is partially offset by a near-term deceleration in CSM release, as in-force book mix shifts toward savings products; 2) P&C underwriting to improve on disciplined expense controls, and we project 1H26 COR to edge down to 95.1% (vs. 95.2% in 1H25); 3) PAB to deliver quality growth in line with its year-start guidance; 4) Asset management profit momentum likely sustained thanks to improving sentiment and trading activities. We remain positive on the Group’s core earnings trajectory, and reiterate our view on L&H CSM growth inflection by FY26E. Maintain BUY, with TP at HK$86/RMB75 (unchanged) based on SOTP implying 0.83x FY26E P/EV.

L&H core metrics back on track. We estimate 2Q26 Group OPAT at RMB42.5bn (+6.8% YoY) driven by cross-segment growth. L&H OPAT is likely to sustain its uptrend as CSM release gradually returns to a growth trajectory. We estimate the Group’s NB CSM to rise by mid-teens YoY in 1H26 against a more stabilized interest rate backdrop, though partially offset by a lower CSM release rate due to in-force product mix shift toward savings-type policies. We maintain our view that L&H CSM growth inflection will reach by FY26E..

2Q NBV may moderate on stringent regulations and margin recalibration. We forecast 1H26 NBV at RMB25bn (+12% YoY), implying a flattish 2Q26. This moderation reflects 1) stringent regulatory oversight on bancassurance expenses extending from commissions to the full fee structure (i.e. Circular 65 in Mar 2026); 2) a high base effect following the actuarial assumption changes as of end-FY25, which left NBV margin in 1H25 unadjusted. Looking into 2H26E, we think the high base impact on new policy sales could be more evident in 3Q26, while the NBV margin drag should gradually normalize toward year-end.

Higher OCI allocation lowers bottom-line upside from equity rally. Unlike major peers, Ping An captured less NPAT upside from the 2Q equity market rally (i.e. CSI 300 +12%) largely due to its higher allocation of stocks and equity funds to FVOCI relative to FVTPL. As of FY25, Ping An’s FVOCI stock exposure was at 43.6% (vs. listed peers at 10%-31%). We forecast net asset value at RMB1.12tn by 1H26, supported by 1) robust retained profit growth from net earnings, and 2) a modest positive impact from higher FVOCI reserves (lower spot yields) partially offset by an increase in insurance finance reserves amid the downward trending 20-day avg. bond yield.

Valuation: Ping An-H is trading at 0.52x FY26E P/EV and 0.75x FY26E P/B, with a yield of 6% and an average three-year forward operating ROE >13%. We are constructive on the prospect of Ping An’s core business improvements, including 1) accelerating Life OPAT growth in FY26E driven by CSM release and balance approaching to inflection; 2) PAB profit enhancement; and 3) ongoing de-risking of the AM segment. Maintain BUY, with our TP at HK$86/RMB75 (unchanged) for H/A share, which implies 0.83x FY26E P/EV and 1.2x FY26E P/B.

Catalysts: 1) faster-than-expected L&H CSM balance growth turnaround within 2026E; 2) continued AM OPAT outperformance led by the de-risking progress; 3) accelerating OPAT payout ratio growth; 4) significant rallies in equity markets; 5) new protection-type product rollouts, i.e. participating critical illness, etc.

Key risks: 1) regulatory tightening on life insurance and financial conglomerates; 2) heightened equity market volatility; 3) a prolonged low-interest rate environment; 4) intensified pricing competition in P&C industry; 5) asset quality deterioration; and 6) a significant decline in Group capital level weighing on DPS growth, etc.

Ping An-H (2318 HK): We derive our price target of HK$86 for Ping An-H (2318 HK) based on SOTP, assuming a 12.5% cost of capital and 2.5% terminal growth rate. Our valuation includes 1) 1.3x Life EV, based on ~13% average ROEV in FY26-28E; 2) 0.9x book value (BV) for Ping An P&C; 3) 0.6x BV for PAB; 4) 1.0x BV for AM and other segments; 5) HK$0.8 per share for finance enablement businesses based on P/B-ROE; and 6) a 15% Group conglomerate discount. Our TP implies 0.83x FY26E P/EV and 1.2x FY26E P/B, vs. currently trading at 0.52x FY26E P/EV and 0.75x FY26E P/B.

Ping An-A (601318 CH): We derive our price target of RMB75 for Ping An-A (601318 CH) based on SOTP and by applying a CNY/HKD exchange rate of 1.09 and an H/A discount of 7%, referring to an average of year-to-date trading. Our TP implies 0.83x FY26E P/EV and 1.2x FY26E P/B.

Investment thesis: Ping An is in the advanced phase of de-risking its property exposure, and with consecutive provisions being made for the AM segment, we expect the AM drag to ease further, which could drive the Group’s valuation rerating over time. As of FY25, the operating loss from AM segment narrowed significantly to RMB3.8bn from RMB11.9bn in the prior year. We believe continued improvement in its core business performance should support a share price re-rating, alongside mgmt.’s focus on shareholder returns and an enhanced balance sheet. We like Ping An for its resilient growth recovery driven by 1) Life OPAT growth acceleration in 2026E, as CSM release approaches an inflection point; 2) continued progress on AM de-risking; and 3) an advanced deployment in technology and the buildout of a healthcare and elderly care ecosystem. We see Ping An as a pioneer in life insurance reform, and expect intra-Group cooperation to further drive synergies and operational efficiency.

Company description: Founded in 1988, Ping An is a leading financial conglomerate with businesses spanning life and P&C insurance, pension, banking, brokerage, trust, and other financial services. The company pursues a technology-empowered growth strategy across core financial businesses of insurance, banking, brokerage, and asset management. As of FY25, Ping An ranked as the second-largest Life and P&C insurers in China by total written premiums. The banking business segment is operated by its subsidiary Ping An Bank (000001 CH, 58% Group stake), which has a focus on retail and SME businesses. Ping An Healthcare and Technology (1833 HK, 53% Group stake) was listed in May 2018 as China’s first listed internet-health company.