Ping An of China (601318): Both embedded value and profit growth surpass expectations. Repurchase provides sustainable support
2018 results exceeded expectations. The company announced its 2018 results: net profit attributable to mothers increased by 21% per year.
The value of new business is growing by 7% annually, exceeding market expectations of 2%.
The embedded value increased by 21% over the beginning of the year and exceeded market expectations by 2%.
Development Trends The value of new businesses exceeded expectations, and the growth rate of embedded value exceeded expectations.
The value of new business increased by 7% per year, exceeding market expectations of 2%, exceeding CICC’s forecast of 1%, corresponding to a 23% increase in 4Q18.
The embedded value increased by 21%, exceeding market expectations by 2%, mainly benefiting from the adjustment of the market value of non-life insurance business (downward interest rates pushed up the value of bonds) and the revaluation of Lufax’s Series C financing value (US $ 7.2 billion).
The Group’s profit exceeded market expectations, mainly due to life insurance OPAT exceeding expectations.
The Group’s profit exceeded market expectations by 9% and exceeded CICC’s forecast of 4%, mainly due to: 1) Life insurance business operation deviation (estimated surrender rate subject) and significant release of risk margins, driving the strong growth of life insurance OPAT by 35%; 2) Impact of the revaluation of Lufax’s Series C financing (US $ 7.2 billion).
The growth of guaranteed new orders 杭州桑拿网 was slightly lower than expected.
The value of long-term protection-type new business increases by 4 per year.
4%, slightly lower than market expectations.
The core indicators of life insurance agents are leading the industry: total manpower increased by 2% annually, average monthly active manpower increased by 5%, and per capita income remained flat for ten years.
The underwriting profit of the property and casualty insurance business exceeded expectations.
Due to the intensified competition in the program rate of the 2H18 auto insurance industry, which eventually led to an increase in corporate tax rates, the profit of the property insurance business decreased by 8%, and the comprehensive cost ratio was 96%, which was stronger than market expectations.
The share repurchase program advanced beyond expectations.
The company announced the A-share repurchase plan: it plans to repurchase A shares for RMB 5-10 billion, with the price not exceeding 101.
24 yuan / share.
We believe that the repurchase reflects confidence in the company’s internal value, which is conducive to boosting H / A estimates, and conversion to A shares can provide certain support (especially when it exceeds 1x P / EV).
Earnings forecast raises the company’s 19 / 20e embedded value forecast1.
6% / 1.
Estimates and recommendations Currently Ping-A / H meets the corresponding 1.
1x 19 years P / EV.
We maintain Ping An-A / H’s recommended / recommended ratings and target price of 89 RMB / 100 HKD unchanged, corresponding to 19 years 1.
4x P / EV, a 29% / 21% growth potential compared to the previous one.
The risk market’s sustainable changes in interest; the long-term Treasury bond interest rate fell rapidly.