From concept drive to deep value cultivation: reexamining Zhongan Online (06060)'s path back to fundamentals

The Zhitong Finance App learned that the stock price of Zhongan Online (06060) increased by more than 40% this month. The market is concerned that the stablecoin law just passed by the Hong Kong government opens up room for imagination for ZA Bank's cryptocurrency business under Zhongan Online. The stablecoin bill brings market attention and a catalyst in the short term, and what is more noteworthy is the long-term valuation repair brought about by improvements in the fundamentals of Zhongan Insurance itself.

1. The Hong Kong government actively creates a favorable environment for Web3, and ZA Bank firmly implements the Web3 ecosystem strategy

Strong policy: The Hong Kong Legislative Council passed the “Stablecoin Bill” in the third reading on May 21, 2025. This move means that the Hong Kong Special Administrative Region of China has begun to establish a licensing system for fiat stablecoin issuers, taking an important step in improving the local regulatory framework for virtual asset activities and injecting regulatory momentum into the virtual asset market. RD InnoTech Limited (RD InnoTech Limited), a joint venture formed by Standard Chartered Bank (Hong Kong), Animoca Brands (Hong Kong), and Hong Kong Telecom, and JD Coinlink (JD Coinlink), a subsidiary of the JD Group, were among the first organizations to participate in the Hong Kong Monetary Authority's stablecoin issuer sandbox testing. A compliant Hong Kong stablecoin is expected to be officially launched before the end of this year. One of Yuancoin Technology's shareholders is ZhongAn Digital Asset Group Limited, a subsidiary of Zhongan International.

ZA Bank layout: With a forward-looking strategic vision and efficient execution capabilities, the layout was achieved ahead of schedule in the Web3 field. As early as April 2023, ZA Bank proposed the development vision of “Banking for Web3” and quickly implemented the plan. In July 2024, ZA Bank became the first digital bank in Hong Kong to provide reserve bank services for stablecoin issuers, and partnered with Yuancoin Innovation Technology, one of the HKMA's first sandbox participants. It will become the first stablecoin issuer to use ZA Bank Reserve Bank services. With the establishment of a stablecoin issuer licensing system, ZA Bank is expected to further expand the reserve bank service business. Increased fiat reserve funds will help ZA Bank to further increase net interest income, and stablecoin-related minting and withdrawal flows are expected to bring more non-interest income to ZA Bank.

At present, ZA Bank has built a diverse Web3 business system, which not only provides stablecoin reserve banking services, but also provides basic banking services for enterprise customers in the Web3 ecosystem, provides clearing and settlement services for local licensed virtual asset trading platforms (VATP), and is the first licensed bank in Asia to provide cryptocurrency trading services for retail users. By the end of 2024, ZA Bank had more than 800,000 retail users, serving more than 3,000 enterprise customers, including more than 200 companies in the Web3 ecosystem. In terms of customer coverage in the Web3 ecosystem, ZA Bank also highlights its excellent diversity. Its service targets cover asset institutional investors such as local licensed VATPs (such as Hashkey and OSL), custodians, market makers, and fund companies. With its rich business types and strong technical service capabilities, ZA Bank continues to expand its boundaries in the Web3 ecosystem and lead the development trend of the industry.

2. Continued improvement in fundamentals and high-quality financial business growth driven by technology

In terms of domestic internet insurance business: From January to April 2025, Zhongan Insurance's total premiums exceeded RMB 10 billion, an increase of about 13% over the previous year, achieving a higher overall growth rate than the financial insurance industry, reflecting the company's growth as a leading Internet insurance company. Zhongan Insurance continues to make new breakthroughs in product innovation. The “Zhongmin Insurance Middle and High-End Medical Care” launched this year covers more people with the sick, the elderly, etc., and has implemented the concept of insurance inclusiveness through features such as zero claims and out-of-hospital medication benefits. At the same time, the company has also been in the new consumer sector for many years, with total pet insurance premiums exceeding 700 million yuan in 2024, leading the industry market share by far.

The company pursues qualitative growth and has achieved underwriting profits for four consecutive years on the underwriting side. The comprehensive cost ratio in 2024 is 96.9%, which is superior to the financial insurance industry average. As can be seen in the company's “Solvency Report for the 1st Quarter of 2025,” the net profit of the company's insurance policy exceeds 568 million yuan, a significant improvement over the loss of 94 million yuan in the first quarter of 2024. According to DBS Bank's research report, the consolidated net profit of Zhongan Insurance is expected to exceed 1 billion yuan in 2025.

As a global leader in insurance technology, Zhongan Insurance has deeply restructured the entire insurance value chain through AI technology. In terms of the underlying architecture, it connects to mainstream domestic models, and its self-developed AI platform “Zhongyoulingshi” has been called more than 50 million times per month, creating intelligent robots covering more than 70 scenarios, leading the industry.

In terms of digital banking business in Hong Kong: ZA Bank is the number one digital bank in Hong Kong, leading other Hong Kong digital banks in terms of number of users and total assets as of the end of 2024. In July 2024, ZA Bank became the first digital bank in Hong Kong to achieve a monthly profit. In 2024, ZA Bank's net revenue reached HK$548 million, a year-on-year surge of 52.6%; the net interest spread increased to 2.41%, better than the Hong Kong banking average; while revenue increased sharply while strictly controlling costs and risks, the annual loss was the smallest of the eight Hong Kong digital banks.

3. After the phased rise in the stock price of Zhongan Online, its intrinsic value is still not fully recognized by the market, and there is significant room for repair in the valuation

After this month's rise, Zhongan Online's current PB is only 1 times, at a historically low level (16% of the valuation score since listing), while China Financial Insurance (2328.HK)'s net market ratio is 1.2 times after growth in the past few years. Zhongan Online's technological attributes, profit improvement expectations, and ZA Bank's value have not been fully reflected, and due to the Hong Kong stock market's style preference for the dividend sector with high dividends in the past few years, the average increase in the stock price of the nine Hong Kong stocks has reached 75%. Price elasticity and repair space .

Meanwhile, professional investment banks have discovered investment opportunities in Zhongan Online. On May 23, Singapore's DBS Bank released a research report stating that it reaffirmed the “buy” rating for Zhongan Online. A target price of HK$20 for 12 months was given. It is believed that the valuation of Zhongan Insurance is historically low. It is believed that as the insurance technology ecosystem continues to improve and the value of digital banking gradually becomes apparent, Zhongan Online is expected to usher in an increase in performance and valuation. Investors need to seize the revaluation opportunity of this insurance company as a benchmark for digital transformation. Among them, ZA Bank was the first profitable digital bank in Hong Kong, and DBS gave a valuation of 2 billion US dollars. Based on Zhongan's 43.43% shareholding ratio, the corresponding value is approximately US$887 million (approximately HK$6.9 billion), which is equivalent to 39% of the current market value. If this part of the value is excluded, the valuation of the core financial insurance business is only 0.7 times PB, which is a significant discount compared to the 1.2 times average value of traditional insurers.

Meanwhile, Guojin Securities's recent research report on Zhongan Online also mentioned that the stablecoin law opens up room for imagination, and expects Zhongan Online's net profit to grow with high elasticity in 2025. In particular, the base for the first half of the year is extremely low (1H2024 net profit is only 55 million yuan), 1Q25 insurance policies have achieved net profit of 570 million yuan, improved both underwriting investment, and predicts that the company will achieve a net profit of more than 900 million yuan in 2025, an increase of 50% year-on-year compared to 2024, and the company's PB valuation continues to maintain a “buy” rating.