20250428-招银国际-中国平安-02318.HK-1Q25_NBV_stayed_robust_lifting_L_H_OPAT_back_to_positive_growth_6页_987kb

Ping An (2318 HK) Summary

Core Content

Ping An, a major Chinese financial services conglomerate, reported robust first-quarter 2025 (1Q25) results, with Life and Health (L&H) New Business Value (NBV) rising 34.9% on a like-for-like basis to RMB 12.9bn. This growth was driven by continued margin expansion, which reached 28.3% (FYP basis), up 11.4% YoY after EV assumption adjustments by end-FY24. The L&H Operating Profit After Tax (OPAT) improved by 5.0% YoY to RMB26.9bn, reversing the previous quarter's decline of -22.8%. The Group's overall OPAT increased by 2.4% YoY to RMB37.9bn, supported by contributions from L&H and asset management.

Despite the positive OPAT, the Group's net profit declined by 26.4% YoY to RMB27.0bn, primarily due to a mixed impact of fair value losses from Fair Value Through Profit or Loss (FVTPL) debts and equity gains from holdings in State-Owned Enterprise (SOE) banks via the HK Stock-Connect program.

Main Points

• L&H NBV Growth: L&H NBV increased by 34.9% YoY to RMB12.9bn, driven by margin recovery and a shift in product mix to long-term protection and participating policies.
• L&H OPAT Recovery: L&H OPAT turned positive, rising 5.0% YoY to RMB26.9bn, aided by rising interest yields and improved operating variances.
• P&C Performance: P&C combined ratio improved to 96.6% in 1Q25, down 3% YoY, attributed to prudent expense controls, reduced natural catastrophe (NAT CAT) claims, and scale-down of loss-making guarantee insurance.
• PAB Profit Decline: Ping An Bank's net profit fell 5.6% YoY to RMB3.2bn, due to a contracted Net Interest Margin (NIM) of 1.83% and declining net fee and commission income.
• Investment Income Fluctuations: Investment income declined significantly by -65% YoY, impacted by fair value losses on FVTPL debts and a rise in China's 10YR government bond yield.
• Future Outlook: The insurer is expected to see NBV growth of 15% YoY in FY25 due to continued margin expansion. P&C OPAT is projected to stabilize over the long term.

Key Financial Highlights

• Group OPAT: RMB37.9bn (up 2.4% YoY)
• Net Profit: RMB27.0bn (down 26.4% YoY)
• L&H NBV: RMB12.9bn (up 34.9% YoY)
• L&H OPAT: RMB26.9bn (up 5.0% YoY)
• P&C Combined Ratio: 96.6% (down 3% YoY)
• PAB NIM: 1.83% (down 18bps YoY)
• Total Premiums: RMB85.1bn (up 7.7% YoY)
• Auto and Non-Auto Premiums: RMB53.7bn and RMB31.4bn respectively (up 3.7% and 15.1% YoY)

Valuation and Key Risks

• Target Price (TP): HK$65.10 (unchanged)
• P/EV (FY25E): 0.8x
• P/B (FY25E): 1.0x
• Avg. 3yr Forward ROE: 13%
• Key Risks:
  • Prolonged low interest rates
  • Intensified equity market fluctuations
  • Lower-than-expected new sales
  • Deteriorated Combined Ratio (CoR)

Capital Management

• Debt Financing Plan: Ping An proposed to issue up to RMB50bn in domestic debt financing instruments in March 2025, aiming to optimize capital structure and reduce financing costs.
• Financing Yield: Approx. 2.1% - 2.3% in the domestic market.
• Impact on ROE: No negative impact expected from the bond issuance.

Asset Allocation

• SOE Bank Holdings: Ping An increased its position in SOE banks via the HK Stock-Connect program, with most stocks assigned to FVOCI (Fair Value Through Other Comprehensive Income).
• Stock Price Performance: H-share banks (ICBC, CMB, ABC, PSB) saw share price increases of 6% to 15% in 1Q25 compared to year-end.
• Net Asset Value (NAV): Increased 1.2% from FY24 to RMB939.7bn.

Shareholding and Performance

• Mkt Cap: HK$836,749.5 million
• Shareholding Structure:
  • Charoen Pokphand Group Company Ltd: 13.0%
  • UBS Group AG: 9.4%
• Share Performance:
  • 1-mth: -2.3%
  • 3-mth: 5.6%
  • 6-mth: -6.1%

Earnings Summary

Analyst Ratings

• CMBIGM Rating: BUY
• Target Price (TP): HK$65.10
• Up/Downside: 41.7%

Related Reports

• Ping An (2318 HK) - Life OPAT awaits for longer time to turnaround, 24 Mar, 2025
• Ping An (2318 HK) - Robust 3Q doubled in NBV and earnings growth, 23 Oct, 2024
• Ping An (2318 HK) - 2Q NBV stabilized against a high base; expect to see Group OPAT turnaround, 27 Aug, 2024
• Ping An (2318 HK) - Expect $3.5bn CB dilutive effect to be short-term, 17 Jul, 2024
• Ping An (2318 HK) - 1Q24 NBV beat; Life OPAT y/y turned positive, 15 Apr, 2024
• Ping An (2318 HK) - Resilient DPS despite OPAT decline; EV assumptions change cut VNB more than expected, 27 Mar, 2024

Analyst Certification

• The research analyst certifies that all views expressed accurately reflect his or her personal views.
• No part of his or her compensation is related to the specific views expressed.
• The analyst confirms no trading in the stock covered within 30 days prior to the report's issue.
• The analyst does not serve as an officer of any Hong Kong listed companies covered.
• No financial interests in the companies covered.

Important Disclosures

• This report is not an offer or solicitation to buy or sell any security.
• CMBIGM does not provide individually tailored investment advice.
• Past performance does not guarantee future results.
• The information is subject to change without notice.
• CMBIGM may issue other publications with different conclusions.
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• United States: Intended solely for "major US institutional investors" under Rule 15a-6.
• Singapore: Distributed by CMBISG, an Exempt Financial Adviser regulated by MAS.