UBS has recently downgraded its target price for NCI (stock code 01336.HK) to $50.50, citing expectations of a slowdown in the company's value of new business (VNB) growth. But here's where it gets controversial: despite the cautious outlook, NCI's recent profit announcement caught attention for being unexpectedly strong, potentially surprising the market. According to UBS's analysis, the company's net profit after tax (NPAT) for the first nine months of 2025 surged by an impressive 45% to 65% year-over-year, reaching between RMB 30 billion and RMB 34 billion. This figure also exceeded the market consensus for the entire fiscal year by approximately 17% to 33%.
For the same period, UBS projects that NCI's VNB will grow at a slower rate compared to previous periods. They assume that the net profit for the third quarter of 2025 will increase around 80% year-over-year, based on their median profit alert estimate. If this holds true, the company’s net asset value (NAV) is expected to see significant quarter-over-quarter growth, despite the overall cautious outlook.
In related news, NCI anticipates its net profit attributable to shareholders for the first through third quarters of 2025 will jump by 45% to 65% compared to the same period last year. This positive profit outlook for the third quarter prompted UBS to revise its full-year 2025 net profit forecast upward by 58%. However, UBS notes that such a strong performance may not be sustainable in the long run, leading to only minor adjustments in future earnings projections. To account for recent market corrections in the fourth quarter, UBS has lowered its target price from the initial $52 to $50.50, maintaining a 'Neutral' rating.
So, is NCI truly on a robust growth trajectory, or are these impressive numbers just a temporary spike? Does the cautious tone from UBS suggest a looming slowdown, or is there more to the story? Share your thoughts and join the conversation—what’s your take on NCI’s future prospects?
