20180823-招银国际-中国平安-02318.HK-Interim_result_highlighted_by_growth_in_profit_and_EV_4页_671kb

Ping An (2318 HK) Interim Results Summary

Core Content

Ping An Insurance (Group) Co. Ltd. (2318 HK) reported its interim results for the first half of 2018 (1H18), highlighting growth in profit and embedded value (EV), while facing challenges in investment performance. The company's diverse business segments, including insurance, banking, technology, and asset management, contributed to the overall financial results.

Key Financial Highlights

• Group Net Profit: Increased by 33.8% to Rmb58.1bn.
• Group Embedded Value (EV): Reached Rmb927.4bn, up 12.4% from the end of 2017.
• P&C Underwriting: Maintained strong performance with a 14.9% increase in gross written premium (GWP) and an improved combined ratio to 95.8%, down 0.3ppt YoY.
• Life and Health Insurance Business: Profit rose 43.3% to Rmb33.8bn, contributing significantly to the net profit growth.
• Technology and Fintech Businesses: Profit surged by 901% to Rmb4.2bn, driven by the performance of Lufax Holding and Autohome, with reduced losses in other technology lines.
• Other Asset Management Business: Profit increased by 84.1% to Rmb6.5bn, with real estate, financial leasing, and overseas operations as main contributors.

New Business Value (NBV) Growth

• 1H18 NBV: Remained flat at Rmb38.8bn, up 0.2% YoY.
• Agent Channel NBV: Declined by 1.5% YoY, but NBV growth turned positive in 2Q18 at 9.9% YoY.
• NBV Margin: Improved to 48.1% for the agent channel, up 6.5ppt YoY, reflecting a better product mix.
• 2H18 Outlook: Expected stronger NBV growth due to the reversal trend in 2Q18, improving NBV margin, and a larger share of long-term protection business.

Valuation Metrics

• PEV (Price to Embedded Value): The stock is trading at 1.20x 1H18 group EV, which is below the core units' valuation of HK$9.7 per share.
• Excluding Technology Units: The P/EV multiple would be 1.13x on the 1H18 basis, above industry peers' average.

Business Segment Performance

Solvency Ratios

• Life and Health Solvency Ratio: 228.0%, down 6.1ppt YoY.
• P&C Solvency Ratio: 216.1%, down 1.4ppt YoY.
• Group Solvency Ratio: 217.3%, up 2.4ppt YoY.

Share Performance

• Current Price: HK$72.8
• 1-mth Return: -1.7%
• 3-mth Return: -9.6%
• 6-mth Return: -17.3%

Shareholding Structure

• Charoen Pokphand Group: 8.02%
• Shenzhen Investment Holdings: 5.27%

Analyst Ratings

• NOT RATED: The stock is not rated by CMBIS.

Analyst Certification

• The research analyst certifies that the views expressed reflect personal opinions and that compensation is not tied to the report's content.
• Confirms no trading or dealings in the stock covered in the report within 30 days prior to the report's release and no trading for 3 business days after.

CMBIS Ratings

• BUY: Potential return of over 15% over next 12 months.
• HOLD: Potential return of +15% to -10% over next 12 months.
• SELL: Potential loss of over 10% over next 12 months.
• NOT RATED: Stock is not rated by CMBIS.

Important Disclosures

• This report is not investment advice and is provided for informational purposes only.
• CMBIS does not guarantee the accuracy or completeness of the information.
• The report may not be reproduced, reprinted, sold, or redistributed without prior written consent.

Auditor

• Auditor: PwC
• Website: www.pingan.cn