20250324-招银国际-中国平安-02318.HK-Life_OPAT_awaits_for_longer_time_to_turnaround_5页_946kb

Ping An (2318 HK) Summary

Core Content

Ping An, a major Chinese insurance company, reported mixed financial results for FY24. The company's Group OPAT (Operating Profit After Tax) increased by 9.1% YoY to RMB 122bn, slightly above the forecasted RMB 120bn. This improvement was driven by a strong rebound in P&C (Property and Casualty) insurance, which rose by 67.7%, and a reduction in losses in asset management by 42.6%. However, Life OPAT declined by 1.9% YoY to RMB 97bn, which fell short of expectations for a return to growth within the year.

The insurer's FY24 NBV (New Business Value) grew by 28.8% YoY to RMB 28.5bn on a like-for-like basis, aligning with expectations. However, based on FY23 assumptions, NBV decreased by 8.2% YoY due to revised actuarial assumptions, including a 50bps reduction in long-term investment return to 4.0% and a 100/200bps cut in RDR (Risk Discount Rate) to 8.5%/7.5% for traditional and non-traditional insurance, respectively. The updated EV (Economic Value) sensitivity analysis indicates that further cuts in these assumptions could significantly reduce NBV/L&H EV/Group EV by 26%/13%/8%, compared to 19%/10%/6% in FY23.

The agency force increased to 363k in FY24, up 4.6% YoY, marking the first headcount turnaround since FY19. Looking ahead, the insurer is expected to continue optimizing its liability structure through the transition to par product sales, which accounted for 12% of written premiums in 2H24.

Key Financial Metrics

Key Insights

• P&C OPAT Growth: P&C OPAT surged 68% YoY to RMB 15bn, driven by improved combined ratios (98.3% in FY24) and a turnaround in guarantee insurance, which saw a 65% reduction in CoR (Cost of Risk) in 2H24.
• Life OPAT: Life OPAT remains on a path to recovery but may take longer than anticipated to return to growth. The insurer's Life OPAT was down 1.9% YoY on a like-for-like basis.
• NBV Performance: FY24 NBV increased 28.8% YoY on a like-for-like basis, but fell 8.2% YoY on a reported basis due to lower investment return and RDR assumptions.
• EV Sensitivity: Revised assumptions have increased the sensitivity of EV to interest rate changes, with further cuts potentially reducing EV by 26%.
• Agency Force: The agency force grew by 4.6% YoY to 363k, indicating a positive trend in personnel after a decline in FY23.
• Valuation: The stock is currently trading at FY25E 0.55x P/EV and 0.8x P/B. The company is expected to maintain positive momentum in business mix and profitability, leading to a revised up FY25-27E EPS estimates by 0.5%/2%/2.5%.
• Target Price: The target price remains at HK$65.1, implying a 36.3% upside from the current price of HK$47.75.

Analyst Ratings and Outlook

• Ratings: The analyst maintains a BUY rating.
• Valuation Outlook: Positive outlook on business mix and sustainable profitability. Investment volatility is considered, but the insurance results are expected to remain stable.
• Future Strategy: The company is expected to continue focusing on liability optimization through par product sales, which could lower the cost of liability and EV sensitivity.

Shareholding and Performance

• Shareholding Structure:

  • Charoen Pokphand Group Company Ltd: 13.0%
  • UBS Group AG: 10.0%

• Share Performance:

  • 1-mth: 1.2%
  • 3-mth: 5.1%
  • 6-mth: 26.8%

• Stock Data:

  • Mkt Cap (HK$ mn): 869,527.5
  • Avg 3 mths t/o (HK$ mn): 2,504.0
  • 52w High/Low (HK$): 59.70/29.90
  • Total Issued Shares (mn): 18,210.0

Analyst Certification and Disclosures

• The analyst certifies that the views expressed in the report accurately reflect personal views and confirms no conflicts of interest.
• CMBIGM is not liable for any loss or damage resulting from reliance on the information in the report.
• The report is not an offer or solicitation to buy or sell any security and is intended for specific investors only.

Important Disclosures

• The report is for informational purposes only and not tailored to individual investors.
• Past performance does not guarantee future results.
• Investors are advised to consult professional financial advisors before making decisions.

CMBIG Ratings

Disclaimer

The information in this report is based on publicly available data and is not guaranteed for accuracy or completeness. CMBIGM may issue other reports with differing information and conclusions. Investors are advised to independently evaluate any investment decisions and consult with a professional financial advisor.