20181108-高盛-中国平安-02318.HK-Technology_corporate_day_takeaways_7页_475kb

Ping An Insurance Group (2318.HK) Technology Corporate Day Summary

Core Content

Ping An Insurance Group's technology corporate day showcased the integration of technology capabilities with financial services to address real-life pain points. The event featured presentations from the management teams of Ping An Technology, Ping An Smart City, OneConnect, and highlighted the potential of the company's ecosystem-driven approach.

Main Points and Key Takeaways

Competitive Advantages in Technology Investment

Ping An emphasized four key competitive advantages:

• Long-term investment: Committed to investing USD 15 billion over the next decade, building on a USD 7 billion investment in the past decade.
• Real-world business scenarios: Technology is applied to solve actual business problems, enhancing the value proposition.
• Large talent pool: Operates 25 research labs with over 1,000 top scientists.
• Massive real-life data: Covers 880 million individuals and 84 million companies across all subsidiaries.

AI Development and Application

• The company outlined the evolution of AI from the "newborn stage" (see/hear/speak/read) to the "learning stage" (knowledge graph) and the "expert stage" (providing professional solutions).
• Access to extensive data from P&C and Autohome is crucial for advancing AI in the automotive sector.
• Recruitment of medical professionals supports AI development in the healthcare field.

Ecosystem and Business Model Development

• The "ecosystem + finance" business model progresses through four stages:
  1. Platform establishment based on real-world scenarios.
  2. Traffic and data accumulation.
  3. Revenue growth.
  4. Profitability.
• Ping An Smart City is at stage 1, Ping An Good Doctor at stage 2, and Autohome at stage 4.
• The company is adopting a revenue sharing model for technology monetization, which offers higher operating leverage than a traditional IT vendor model.

Monetization and Financial Outlook

• Technology capabilities enhance the core financial businesses, providing additional monetization channels.
• Strong earnings growth was observed in 2018 from FinTech & HealthTech businesses, indicating the potential for future earnings growth.
• The company is rated Buy (on Conviction List) with a 12-month SOTP-based price target of HK$101/Rmb85.

Financial Metrics

M&A Rank

• Ping An is ranked 3 on the M&A scale, indicating a low probability of being acquired.
• M&A rank 3 is considered immaterial and does not affect the price target.

GS Factor Profile

• Growth: Based on forward-looking sales, EBITDA, and EPS growth.
• Financial Returns: Based on forward-looking ROE, ROCE, and CROCI.
• Multiple: Based on P/E, P/B, P/D, EV/EBITDA, EV/FCF, and EV/DACF.
• Integrated: A composite of Growth, Financial Returns, and (100% - Multiple).

Investment Rating and Distribution

• Rating Distribution:

  • Buy: 35%
  • Hold: 54%
  • Sell: 11%

• Investment Banking Relationships:

  • Buy: 64%
  • Hold: 57%
  • Sell: 55%

Coverage Groups

• Thomas Wang covers A-share Insurance, Greater China Insurance, Hong Kong Insurance, India Insurance, and Taiwan Banks/Insurance.

Key Risks and Considerations

• Key downside risks include macro concerns over asset quality in China and a decline in long bond yields.
• The company is not disclosing financials, but positive developments in operating metrics suggest future earnings growth.

Regulatory Disclosures

• Goldman Sachs may beneficially own 1% or more of Ping An's securities.
• The firm may receive compensation for investment banking services related to Ping An.
• Analysts are not permitted to own securities of companies in their coverage area.
• Non-U.S. analysts may not be subject to certain FINRA restrictions.

Additional Disclosures

• The research is intended for "wholesale clients" in jurisdictions such as Australia, Brazil, and New Zealand.
• In the European Union, the research is subject to specific conflict of interest disclosures.
• Goldman Sachs operates under various regulatory frameworks in different regions, including Japan and Singapore.

Investment Strategy

• GS SUSTAIN is a global investment strategy focusing on identifying high-quality industry leaders with sustainable competitive advantages and effective ESG risk management.
• Companies on the GS SUSTAIN 50 list are expected to deliver long-term outperformance.

Summary

Ping An is leveraging its technology capabilities to create a sustainable competitive advantage and a strong economic moat. The company's ecosystem approach, combined with strategic AI development and a thoughtful monetization model, positions it well for long-term growth. Despite the lack of financial disclosures, the strong performance in 2018 and the company's focus on innovation and integration suggest a promising outlook. The Buy rating and price target reflect confidence in Ping An's ability to deliver superior returns, though macroeconomic risks remain a concern.