ZA ONLINE(06060) 华创证券·2024-08-28 10:20Investment Rating - The report maintains a "Recommend" rating for ZhongAn Online (6060 HK) with a target price of HKD 15 1, compared to the current price of HKD 12 6 [1] Core Views - ZhongAn Online's core business shows steady growth, with international business development holding promising potential [1] - The company's domestic insurance business continues to be profitable, with insurance service revenue reaching RMB 15 088 billion in H1 2024, a 19% YoY increase [1] - The comprehensive cost ratio rose by 2 1 percentage points to 97 9%, driven by a 3 6 percentage point increase in the loss ratio to 60 7% [1] Business Segments Health Ecosystem - Insurance service revenue in the health ecosystem reached RMB 4 867 billion in H1 2024, up 22 7% YoY, accounting for 32 3% of total insurance service revenue [1] - The flagship product "Zunxiang e Sheng" has undergone 24 iterations and expanded coverage to private medical institutions [1] - Non-standard inclusive products saw total premiums exceed RMB 330 million, a 270% YoY increase [1] Digital Life Ecosystem - Insurance service revenue in the digital life ecosystem reached RMB 7 078 billion in H1 2024, up 24 2% YoY, accounting for 46 9% of total insurance service revenue [1] - E-commerce and travel insurance remain mature businesses, while innovative products like pet insurance and screen breakage insurance are driving growth [1] Consumer Finance Ecosystem - Insurance service revenue in the consumer finance ecosystem declined by 1 7% YoY to RMB 2 280 billion in H1 2024, accounting for 15 1% of total insurance service revenue [1] - The company has actively scaled back its consumer finance business, focusing on small, dispersed, and short-term internet consumer finance assets [1] Auto Ecosystem - Insurance service revenue in the auto ecosystem reached RMB 863 million in H1 2024, up 24 2% YoY, accounting for 5 7% of total insurance service revenue [1] - The company has capitalized on the growth of new energy vehicle insurance, with premiums increasing by 214 8% YoY [1] International Business - ZA Bank, a digital bank in Hong Kong, achieved net income of HKD 255 million in H1 2024, up 45 9% YoY, with a net interest margin of 2 21% [1] - Peak 3 (formerly ZA Tech) expanded its presence to 16 countries and regions, with technology output revenue reaching RMB 123 million in H1 2024, up 3 8% YoY [1] Domestic Technology Business - Domestic technology output revenue reached RMB 319 million in H1 2024, up 112 7% YoY, driven by new contracts with 56 insurance industry clients [1] Investment Performance - Total investment assets amounted to RMB 37 698 billion as of H1 2024, with a fixed-income allocation of 75 4% [1] - The total investment yield was 3 3%, down 0 7 percentage points YoY, while the net investment yield was 2 3%, up 0 1 percentage points YoY [1] Valuation and Forecast - The report adjusts EPS forecasts for 2024-2026 to RMB 0 6/0 7/0 8, with BPS forecasts of RMB 14 5/15 4/16 5 [1] - A sum-of-the-parts valuation approach is used, with a target market value of RMB 18 8-22 47 billion for 2024 [1]