Summary

-According to the first quarterly results of NCI (or the Group), its net profit increased largely by 132% y-y, especially for investment gains, mainly due to the improvement of the market environment, increased by 111% y-y approximately;

-According to CIRC, the Group's premiums of life insurance increased only by 6% y-y in April, and the market share also continued to go down, mainly due to the increase of the market competition, especially for challenges from CPIC and Taikan Life;

-Moreover, CPIC's total assets increased stably by 1.1% to RMB650.674 billion compared to the end of 2014, with net assets of RMB53.94 billion, up 11.5%, equivalent to the BVPS of RMB17.29;

-Considering the Group's stable performance in 1Q, we expect Chinese insurers` performance would increase largely under the current bull market, especially for investment gains. We hold optimistic views for NCI's future performance, and increase NCI's 12-month target price to HK$65.00, around 33% higher than the latest closing price, equivalent to 12.6xP/E and 2.4xP/B in 2016 respectively, maintain Buy rating.

The strong growth of investment gains

By the end of 1Q2015, NCI's net profits amounted to RMB3.624 billion, increased largely by 132% y-y, and investment gains, mainly due to the improvement of the market environment, increased by 111% y-y approximately to RMB14.517 billion. We believe NCI's investment gains would increase strongly in 2015.According to the current operating performance, we expect NCI's incomes would increase significantly in 2015, and net profit would increase by around 42% y-y.

Risk

The growth might be lower than our expectation due to the large volatility of investment gains;Share price decreases obviously in the short run due to the deterioration of the market environment.

Financial Data

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