BofA Securities has issued a research report stating that PICC Group (01339) has announced plans to issue up to RMB 15 billion in new A-shares to its largest shareholder, the Ministry of Finance. Given that the Ministry holds approximately 60.8% of the group's total share capital and about 75.8% of its A-shares as of the first half of 2026, the placement price will be determined based on the average trading price over the 20 trading days prior to the official issuance date, following shareholder and regulatory approvals. The bank views the dilution as limited and has maintained its earnings forecasts and target price, reiterating a "Buy" rating on the H-shares with a target price of HK$7.8. Due to the A-shares trading at a premium of roughly 50% to the H-shares, BofA has assigned an "Underperform" rating to PICC's A-shares (601319.SH) with a target price of RMB 6.76.

The bank expects the fundraising to conclude by the end of 2026, with the immediate dilution primarily impacting the 2026 return on equity, book value per share, and dividend per share. Based on estimates, if the placement prices were RMB 5.8, RMB 7, and RMB 8 respectively, these would correspond to approximately 0.8 times, 1.0 times, and 1.1 times the 2025 actual book value per share. Under these scenarios, return on equity would decline by 0.3 percentage points, book value per share would drop by 1.4%, decline by 0.4%, or rise by 0.2%, respectively, and dividend per share would fall by 5.5%, 4.6%, and 4.1%, respectively. Overall, the dilution remains limited, and these figures do not account for potential benefits from the capital injection. Once the new capital begins contributing in 2027, the dilution should be even lower.

The bank points out that given the single-digit premium growth and insurance liabilities growth in the first half of 2026, coupled with a core solvency adequacy ratio as high as 198%, the new capital may not significantly accelerate insurance business growth, as the bottleneck lies in demand rather than capital. It is anticipated that most of the new capital will be allocated to investments in the short term. As of the first half of 2026, equities and funds account for approximately 6% and 10% of the total investment portfolio, respectively, and the bank believes there is still room to further increase these allocations.