RD InnoTech not selected in the first batch of Hong Kong stablecoin licenses, with limited impact on ZhongAn's share price

Overview

This report focuses on ZhongAn Insurance 6060.HK and its affiliate RD InnoTech missing the first batch of Hong Kong stablecoin issuer licenses. J.P. Morgan believes that although the market may be disappointed in the short term, ZhongAn's share price has already fallen back to levels seen before the stablecoin bill passed in May 2025, so the negative expectations have largely been priced in. The company's core insurance business remains the main support for valuation and earnings, and FY25 results show continued improvement in underwriting quality and a more pragmatic outlook for shareholder returns.

Core views

The core views are as follows: first, the negative impact of RD InnoTech not being selected for the first batch of licenses is limited, and regulatory uncertainty has actually been reduced; second, ZhongAn's valuation is still mainly determined by its core insurance business rather than short-term stablecoin license expectations; third, although ZA Bank is unlikely to generate scaled revenue from the first round of stablecoin issuance, as Hong Kong's first digital bank with custody capabilities it could still benefit from reserve bank and custody service demand if RD InnoTech is included in later license rounds; fourth, the current 0.9x FY26E P/B valuation is close to a historical low, and the share-price pullback may offer an opportunity to buy on weakness.

Analysis framework

The report uses event impact analysis, segment profit contribution analysis, and a P/B valuation framework. On the short-term side, it assesses the marginal shock of the stablecoin license outcome on market expectations and the share price; on the fundamentals side, it analyzes FY25 underwriting quality, product mix, cost control, and business expansion; on the valuation side, the target price is built on a 1.7x FY26E P/BV basis, together with ROE, required return, and growth assumptions.

Methodology notes

• Valuation methodsP/BV valuation method

  Derive the target price using the FY26E P/BV multiple

  The report derives the December 2026 target price of HK$27 based on a 1.7x FY26E P/BV valuation multiple and incorporates ROE, required return, and growth factors into the valuation assessment.

• Event analysisPolicy and licensing event impact analysis

  Assess the impact of the stablecoin license outcome on share-price expectations

  The report judges that RD InnoTech missing the first batch has already been priced in by the market, so the official announcement has limited additional downside pressure on ZhongAn.

• Segment analysisProfit contribution breakdown

  Separate the valuation contribution from insurance, banking, and technology businesses

  Insurance business contributed 93.3% of FY25 adjusted profit, while the banking business contributed only 0.3%, so the current valuation is mainly supported by the core insurance business.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 6060.HK

  Core coverage stock

  Strengths

  Improving profitability quality in the core insurance business, relatively stable underwriting profit outlook, low valuation, and significant upside implied by the target price.

  Weaknesses

  The banking business currently contributes very little profit, and stablecoin-related businesses are unlikely to generate scaled revenue in the near term.

  Comparison

  The current 0.9x FY26E P/B is below the historical average mentioned in the report and close to the historical low.

  Risks

  Credit insurance exposure grows faster than expected, life consumer and health business development is slower than expected, and technology business monetization is slower than expected.

• RD InnoTech

  ZhongAn affiliate, 9.1% indirect stake

  Strengths

  If it obtains a license in later batches, it may connect to the stablecoin issuance, reserve, and custody ecosystem.

  Weaknesses

  It did not receive a first-round Hong Kong stablecoin issuer license, and the near-term catalyst has fallen through.

  Comparison

  The first batch of licenses went to Anchorpoint Financial and HSBC, while RD InnoTech was not selected.

  Risks

  Subsequent license approval remains uncertain, and the regulatory pace and business monetization timeline may be slower than the market expects.

• ZA Bank

  ZhongAn-related banking platform

  Strengths

  As Hong Kong's first digital bank with relatively complete custody capabilities, it may benefit from future reserve and custody demand related to stablecoins.

  Weaknesses

  It is expected to be difficult to generate immediate scaled revenue in the initial issuance phase.

  Comparison

  Compared with the first-round license winners, ZA Bank's opportunity is more tied to later batches and supporting services.

  Risks

  Delayed stablecoin rollout, uncertainty over license batches, and lower-than-expected revenue contribution.

Key data

• Current share priceHK$13.60As of April 10, 2026.
• Target priceHK$27.00The target price horizon is December 31, 2026.
• Implied upside98.5%Estimated from the HK$27.00 target price versus the HK$13.60 current price.
• RatingOverweightJ.P. Morgan maintains an Overweight rating.
• FY26E P/B0.9xCurrent trading valuation, near the historical low of 0.6x and below the historical average of 2.1x.
• Valuation assumption1.7x FY26E P/BVUsed to derive the HK$27 target price; the report also mentions the historical average/low at 2.7x/0.7x.
• ROE6%The report cites the ROE level corresponding to the current valuation.
• Insurance business profit contribution93.3%The insurance business accounts for the majority of FY25 adjusted profit.
• Banking business profit contribution0.3%Indicates that the banking business contributes little to valuation in the near term.
• FY24 total premiumabout Rmb33.4bn, up 13% YoYZhongAn is China's largest pure online insurance company.

Impact & implications

The investment implication is that missing the first batch of stablecoin licenses is more a short-term sentiment shock than a fundamental event that changes ZhongAn's core value. If the share price weakens further on this news, the report believes it may create a buying opportunity on weakness. Over the medium to long term, once Hong Kong's stablecoin roadmap becomes clearer, reserve and custody services may create a structural opportunity, but the monetization pace will depend on subsequent license batches, RD InnoTech's progress, and ZA Bank's ability to execute the business rollout.

Risks

• Credit insurance portfolio exposure grows faster than expected, which could pressure underwriting quality.
• Life consumer and health business development is slower than expected, affecting premium growth and product-mix optimization.
• Technology business growth momentum is strong but monetization is slower than expected, which may limit valuation upside.
• RD InnoTech still does not enter subsequent stablecoin license batches, which may weaken market expectations for the related theme.
• Changes in interest rates, equity market volatility, and the macro environment may affect insurers' investment income and solvency expectations.

What to watch

• Subsequent Hong Kong stablecoin license batches and whether RD InnoTech is selected.
• Actual revenue realization at ZA Bank from stablecoin reserves, custody, and related banking services.
• 1H26 interim results, especially the combined ratio, underwriting profit, and the expansion of auto and health businesses.
• Whether the contraction in consumer finance is fully offset by growth in auto and health businesses.
• Whether FY26E P/B valuation re-rates as fundamentals improve and regulatory uncertainty declines.