China Life 1H2026 Results: With Profit More Than Doubling, Can Share Price Growth Be Sustained?

Investment Income and the Bancassurance Channel Are Gaining Momentum

Table 1: Summary of China Life's 1H2026 Results

CNY billion, unless otherwise stated	Forecast	Actual	Forecast Growth (%)	Actual Growth (%)
Revenue	327.0	434.6	36.5%	81.5%
Net Profit	131.6	134.5	221.6%	228.6%
New Business Value1	-	38.2	-	33.7%
Source: Bloomberg L.P., iFAST Compilations. Data as of 30 June 2026 Note 1: New Business Value refers to the present value of the economic profit expected to be generated by the policies sold by an insurer within a given period.

China Life issued a positive profit alert in mid-July, so the market had already largely priced in the news of profit growth exceeding 200.0%. Revenue, however, was the new highlight of this interim results announcement — its y-o-y growth of over 80.0% significantly exceeded market expectations, once again demonstrating China Life's resilience as the leading mainland Chinese insurer.

As we mentioned in before, although investment income amplifies the uncertainty in China Life's revenue and profit, China's low interest rate environment has yet to reverse, and the interest rate gap between ordinary deposit products and investment returns remains intact. In addition, China Life's continued increase in investment in key technology sectors such as artificial intelligence and semiconductors has allowed its investment income to benefit more from the equity market recovery. As a result, China Life's net investment income from equities rose 32% y-o-y in 1H2026, and its total investment yield also improved from 3.29% in the same period last year to 5.58%. Higher investment returns have also made it easier for China Life to market its floating-return products, thereby driving new business growth.

On the other hand, revenue from the bancassurance channel has also continued last year's uptrend. In 1H2026, total premium income from the bancassurance channel rose 12.4% y-o-y to CNY 41.7 billion, with first-year regular premium income surging 49.3%, indicating that more new business income is flowing in through the bancassurance channel. More importantly, the growth in bancassurance channel revenue is driven by demand from households reallocating traditional savings into floating-return products, which forms a positive feedback loop with the rise in investment income discussed above, jointly driving China Life's revenue growth.

Leading Position in Insurance Remains Solid, Profitability Stays Resilient

Chart 1: China Life's Premium Income and Embedded Value Growth Rate

Note: The sharp decline in premium income in 2022 was due to a change in the accounting standard's method of recognizing premium income, not a material change in the business.

Apart from floating-return products, annuity insurance products, which account for 42.5% of new policies, also deserve attention. As a well-known insurer in China, China Life's annuity products are easier to promote among potential customers. In addition, as the proportion of China's aging population begins to rise, and household savings propensity generally remains high, demand for insurance products offering stable cash flows is set to increase accordingly. Furthermore, China Life has more bank distribution channels as well as health and elderly-care programs, allowing its products to reach more customers with related needs, thereby driving growth in the new business value for China Life's policies.

Chart 2: P/EV Ratio of Insurance Companies

Better-than-expected investment returns, together with growth in the new business value driven by higher new policy volumes, have both helped drive up China Life's embedded value (the sum of adjusted net asset value and the present value of future cash flows from new business), which rose 10% in 1H2026.

Compared with peer insurers, as of 8 September 2026, China Life's price-to-embedded-value-per-share ratio (Price-to-Embedded Value Per Share, hereafter referred to as “P/EV”) stood at 0.44x, which is merely at the median level among peers and notably below 1. In absolute terms, China Life's Embedded Value is higher than that of the other companies shown in Chart 2, reflecting that as the leading insurer, its premium income and policy scale both surpass those of its peers. Therefore, with the pace of policy expansion still accelerating and investment returns likely to continue exceeding expectations, the relatively low P/EV suggests that China Life's share price still has room to rise.

Chart 3: China Life 2021-1H2026 New Business Value Margin

From a profitability perspective, we can use NBV Margin (New Business Value Margin) to gauge China Life's profitability, as this metric mainly reflects the embedded value created per unit of annualized new premium. Driven by the policy requiring insurers' actual commission payouts to match their filed rates, China Life's actual commission payout in the bancassurance channel declined last year, pushing the New Business Value Margin back up to a near five-year high, while the margin in 1H2026 was also maintained at 35%, indicating that China Life's ability to capture value from new business remains relatively stable.

Share Price Growth Still Has Support

In this round of interim results announcements, the  major five listed insurers (PICC, Ping An, China Life, New China Life, and CPIC) collectively declared interim dividends for the first time. China Life's interim dividend payout ratio was 7.5%, slightly lower than 16.4% in the same period last year, but this move also means China Life has successfully paid interim dividends for three consecutive years. As mainland China's capital markets are pushing listed companies to increase dividend frequency, insurers' dividend policies are expected to become more stable going forward. Furthermore, as a mainland Chinese insurance stock, China Life's stable dividend policy and growth outlook may attract investors seeking stability, thereby supporting its share price.

Chart 4: 12-Month Forward P/E of China Life Insurance

China Life's current 12-month forward P/E stands at 4.7x, significantly below its 10-year average of 7.1x. Given the impressive growth in its interim results, together with continued strong new business growth momentum, we have raised our earnings forecast for China Life. At the same time, however, China Life's profit is highly correlated with investment returns, and as most of its investment assets remain bond instruments, an accommodative interest rate environment could weigh on reinvestment income. In light of this, we have lowered our target P/E for China Life to 5x, applying a more conservative multiple to match the upgraded earnings forecast. The target price has been raised to HKD 39.1, representing a potential upside of 32.1% as of 8 September 2026.

Table 2: Valuation and EPS Forecast of China Life Insurance

	2025A	2026E	2027E	2028E
EPS (HKD)	5.9	6.6	7.3	7.8
EPS growth rate	44.3%	12.2%	9.8%	7.4%
P/E ratio	5.0	4.5	4.1	3.8
Dividend yield	3.1%	3.5%	3.9%	4.1%
Target price at the end of 2028 (Based on 5x Forward P/E)				39.1
Potential upside				32.1%
Source: Bloomberg L.P., iFAST Compilations. Data as of 8 September 2026.