Date of Report
22 October 2024
Broker Name
UOB Kay Hian
Company Description
Ping An Insurance Group is one of the largest insurance companies in China, offering a range of products and services across various segments, including life and health (L&H) insurance, property and casualty (P&C) insurance, banking, asset management, and technology.
Stock Data
- Share Price: HK$49.05
- Target Price: HK$69.00 (previously HK$64.00)
- Upside: +40.7%
- GICS Sector: Financials
- Bloomberg Ticker: 2318 HK
- Shares Issued: 7,447.6 million
- Market Cap: HK$1,034,543.7 million (US$133,101.4 million)
- 3-Month Average Daily Turnover: US$406.9 million
- 52-Week High/Low: HK$59.70 / HK$29.55
Recent Performance
Price Performance (%)
- 1 Month: +30.3%
- 3 Months: +46.9%
- 6 Months: +68.7%
- 1 Year: +29.6%
- Year-to-Date: +21.7%
3Q24 Results
- Group OPAT: Rmb 35,336 million (up 22.1% YoY)
- Net Profit: Rmb 44,563 million (up 151.3% YoY)
- First-Year Premium (FYP): Rmb 46,406 million (up 50.4% YoY)
- New Business Value (NBV): Rmb 12,840 million (up 110.3% YoY)
Segment Performance:
-
L&H Insurance:
- OPAT: Rmb 28,044 million (up 7.8% YoY)
- Strong premium growth supported by a buying spree before the suspension of certain life insurance products.
-
P&C Insurance:
- OPAT: Rmb 4,014 million (up 455.2% YoY)
- Driven by growth in insurance revenue and improved combined ratio.
-
Banking:
- Revenue: Rmb 8,028 million (down 2.8% YoY)
- Facing earnings pressure due to sluggish revenue and rising credit risk.
-
Asset Management:
- OPAT: Loss of Rmb 3,612 million due to one-off impairment, with potential recovery linked to macroeconomic improvement.
Key Ratios
- NBV Margin: 27.7% (up 7.9 ppt YoY)
- Combined Ratio (P&C): 97.8% (improved by 4.0 ppt YoY)
- Net Interest Margin (Bank): 1.87%
Stock Impact
-
Investment Performance:
- The net investment yield decreased by 0.2 ppt YoY to 3.3%, while the comprehensive investment yield rose by 1.3 ppt YoY to 5.0%, exceeding long-term return assumptions.
-
Sales Outlook:
- Management anticipates September and October as traditionally weaker months, but plans to maintain focus on participating and traditional protection products.
-
Dividend Policy:
- Linked to OPAT; management expressed a preference for cash dividends among shareholders.
Earnings Revision/Risk
- OPAT Forecasts:
- Increased by 6.6% for 2024, 3.4% for 2025, and 1.8% for 2026 due to stronger performance in the life and P&C segments.
Valuation/Recommendation
- Recommendation: Maintain BUY with a higher target price of HK$69.00. The target price reflects a 0.77x valuation of the 2024 group embedded value, indicating that Ping An trades below its historical average P/EV of 0.55x with a 5.0% dividend yield.
