CICC has released a research report stating that ZA ONLINE (06060) is currently trading at only 0.6x 2026e P/B. Given that the company's underwriting and investment performance in 1H26 exceeded the firm's expectations, CICC has raised its 2026 net profit forecast by +12.6% to RMB 2 billion. The firm maintains its 2027 earnings forecast unchanged, along with its Outperform rating and HK$23.0 target price, corresponding to 1.2x 2026e P/B. CICC believes the stock has been oversold notably amid tightening liquidity in the Hong Kong market, and with the major shareholder having continuously increased its stake, the interim results could serve as a key catalyst for a rebound. The firm reiterates its positive stance.

Key takeaways from CICC's report:

1H26 profit significantly exceeded the firm's and market expectations

The company reported 1H26 results with net profit attributable to shareholders up +132% year-on-year to RMB 1.55 billion (all figures in RMB unless otherwise specified), substantially beating the firm's and market forecasts. The combined operating ratio (CoR) improved by 0.1 percentage point year-on-year to 95.5%. Total investment returns on insurance assets surged +150% year-on-year to RMB 1.596 billion, while net assets attributable to shareholders rose +5.9% year-on-year to RMB 26.9 billion.

Underwriting profit steadily improving with an optimistic outlook

In 1H26, ZA ONLINE's total premiums declined -0.6% year-on-year to RMB 16.6 billion, with premiums from health, digital life, auto, and consumer finance ecosystems up +7%, +25%, +4%, and -79% year-on-year, respectively. The proactive wind-down of legacy consumer finance business was the main drag on growth, which CICC expects to diminish going forward. Additionally, the company's auto insurance grew slowly amid operational adjustments, but the firm anticipates a notable acceleration in 2H26. In 1H26, ZA ONLINE's CoR improved by 0.1 percentage point year-on-year to 95.5%, with underwriting profit up +17.8% year-on-year to RMB 770 million. CICC believes the company has developed mature underwriting profitability control capabilities across multiple business lines, akin to established property insurers, and is positioned in markets with still-strong growth potential. The firm expects steady underwriting profit growth ahead, with particular optimism on the future underwriting profit expansion potential from innovative businesses such as the health ecosystem and pet insurance within digital life.

ZA Bank continues to generate profits

ZA Bank turned profitable in 2025. In 1H26, its net interest margin improved by 0.61 percentage point year-on-year to 2.99%. Net income rose +26.6% year-on-year to HK$580 million, with net profit up +43.7% year-on-year to HK$71 million. Invest customer assets grew +155.4% year-on-year. ZA Bank has continued to launch new products, including Hong Kong IPO subscription services, direct HKD subscriptions for USD-denominated funds, and cross-border wealth management connect, deepening its investment services ecosystem.

Investment returns and net profit surged significantly year-on-year

In 1H26, ZA ONLINE's total investment returns on insurance assets rose +150% year-on-year to RMB 1.596 billion. The group's annualized net and total investment yields changed by -0.6 percentage point and +4.2 percentage points year-on-year to 1.4% and 7.6%, respectively. Both investment and underwriting performance drove net profit attributable to shareholders up +132% year-on-year to RMB 1.55 billion.

Risk warnings: Intensifying competition in the internet insurance market; significant volatility in capital markets; natural disasters; policy uncertainty.