Profile
Previous Close Price
Key Statistics
| Dec RMB mn | 2023 | 2024f | 2025f |
|---|---|---|---|
| PE (X) | |||
| Div Yield (%) | 5.2 | 5.3 | 5.5 |
| P/BV (X) | 1.0x | 0.9x | 0.8x |
Recent Developments
Our Views
Life business reforms starting to bear fruit. After four years of transition, Ping An has completed its life business reform through a) agent reform to refocus on premium agents; b) channel reform to deepen its outlet and community grid-channel rooted service; c) product reforms to enhance “insurance+ health+ eldercare” value proposition; and d) technology enablement, we believe Ping An is entering into the next life business accelerating growth cycle.
VNB growth to reach 36%/11%/11% y/y in 24/25/26F. 3Q24 VNB growth far exceeded expectation and landed at +110% y/y, with 9M24 VNB up 34% y/y. Noticeable VNB margin improvement of 5.7ppts y/y, strong bancassurance channel contribution, decent acceleration in operating profit growth (+5.5% y/y vs +1.3% y/y in 1H24) and strong investment income growth are among other key highlights. With 4Q a low y/y base and growth momentum to continue into next year, we now expect its VNB to further grow by 36%/11%/11% y/y in FY24/25/26F.
Sustained fundamental improvements to drive further re-rating. Ping An’s share price has rebounded 30% since the stimulus package was released on 23 Sep, reflecting an improvement in investor sentiment towards China non-bank financials. Trading only at 0.8x forward P/EV (moderately below 5-year mean), Ping An’s valuation has yet to price in the strong growth recovery in its VNB and embedded value (EV).
Lift TP to HKD72 (vs. HKD70 previously); reiterate BUY. Our TP is based on a SOTP valuation: a) 1.0x (previously 0.9x) FY25 price to embedded value ratio (P/EV) for the life business, b) DBS TP of RMB12.8 for PAB, c) unchanged 0.8x FY25 P/B for P&C and 0.8x for asset management segment, and d) MTM being listed as a fintech business. We believe the robust VNB and EV growth recovery will support a further share price upside. Lift TP to HKD72, reiterate BUY.
Risks
- i) Increasing market competition, ii) interest rate downcycle, iii) rising volatility in China’s bond and equity markets, iv) policy risks, and v) an economic slowdown in China
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