On Tuesday, HSBC revised its price target for PICC Property & Casualty Co Ltd (2328:HK) (OTC: PPCCY) shares, a leading insurance firm, decreasing it to HK$11.70 from the previous HK$12.00. Despite the adjustment, the firm has upheld its Buy rating on the stock.
The adjustment in price target comes as PICC P&C's shares are currently valued at a price-to-book (P/B) ratio of 0.8x for the year 2024 estimates and a price-to-earnings (PE) ratio of 6.3x for the year 2025 estimates. HSBC's outlook for the company includes a forecast of compounded annual growth rates (CAGRs) of 6.1% for insurance revenue and 8.8% for book value over the period spanning 2023 to 2026.
The firm's analyst cited several risks that could potentially affect the stock's performance negatively. These include potential issues with asset quality, national service risks, and the possibility of increased resource allocation towards life and health insurance companies.
HSBC's maintained Buy rating suggests that, despite the potential risks and the lowered price target, the firm still views PICC P&C's stock as a favorable investment. The new price target of HK$11.70 reflects a more conservative valuation while still implying a positive outlook for the company's financial growth and stock performance in the coming years.
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