20230322-招银国际-众安在线-06060.HK-Better_profits_achieved_across_3_business_lines_5页_854kb

ZhongAn (6060 HK) Summary

Core Content

ZhongAn, listed on the Hong Kong Stock Exchange, has demonstrated significant improvements in its underwriting (UW) profit and combined ratio across FY22. The company's performance is driven by technology-driven cost efficiency in its health and digital lifestyle ecosystems, which led to a decline in loss and channel fee ratios. This has contributed to a better UW margin and a narrowing net loss.

Main Business Lines and Performance

• Insurance Business:

  • Combined ratio improved to 98.5% in FY22, up 1.1pts YoY.
  • UW profit grew 338% YoY to RMB329mn.
  • Premium income increased by 16.1% YoY to RMB22,266mn.
  • Loss ratio decreased by 2.4pts YoY to 55.2%.
  • Channel fee ratio decreased by 1.3pts YoY to 43.3%.

• Technology Export:

  • Revenue rose 13.8% YoY to RMB592mn.
  • Net loss narrowed by RMB165mn.
  • Expected to see continued growth and margin improvement in FY23E-FY25E.

• ZA Bank:

  • Delivered robust revenue growth of 106% YoY.
  • Maintained its top-branding virtual bank position in HK.
  • Expected to see an inflection point in profitability in FY24E.

Key Financial Metrics

Valuation and Outlook

• ZhongAn is currently trading at 1.0x FY23E P/S and 1.6x FY23E P/B.
• The company is expected to see margin improvements across all three major segments in FY23E-FY25E.
• Profitability for the ZA Bank and technology export businesses is anticipated to improve by FY24E.
• The analyst reiterates a BUY rating, with a target price of HK$33.82, indicating a potential upside of 47.0%.

Shareholding and Market Data

• Shareholding Structure:

  • Ant Group: 13.5%
  • Tencent Computer System: 10.2%

• Stock Data:

  • Market Cap: HK$32,660.0 mn
  • 52-week High/Low: HK$28.20 / HK$14.48
  • Total Issued Shares: 1,420.0 mn

• Share Performance (3-mth):

  • Absolute: 13.3%
  • Relative: 12.7%

Analyst Certification and Ratings

• The analyst certifies that the views expressed are based on personal analysis and not influenced by compensation.
• The report does not include any conflicts of interest that could affect its objectivity.
• CMBIG Ratings:
  • BUY: Stock with potential return of over 15% over next 12 months.
  • OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over next 12 months.

Disclaimer

• This report is not an offer or solicitation to buy or sell any security.
• The information is based on analyses of publicly available data and is not guaranteed.
• Investors are advised to consult with a professional financial advisor for personalized advice.
• The report is for the use of intended recipients only and may not be reproduced or distributed without prior written consent.

Risk and Legal Information

• The report is subject to change without notice.
• CMBIGM may have investment banking relationships with the companies mentioned.
• In the U.S., the report is only for "major US institutional investors".
• In the U.K., it is only for those falling within Article 19(5) of the Financial Services and Markets Act 2000.
• In Singapore, it is distributed by CMBISG, an Exempt Financial Adviser.