U/G - Defensive pick to outperform peers
​U/G to BUY and lift TP to NT$34: We upgrade China Life as we expect its 2016F earnings growth to turn positive, outperforming peers’ avg. decline of 32% YoY for 2016F earnings in our coverage. This is mainly driven by a larger positive interest spread, along with a higher recurring yield of ~3.6% (vs. peers’ of 3.2-3.5%) and a lower liability cost of ~3.4% (vs. peers’ of 3.8-4.4%). We lift our TP to NT$34 based on 2017F EV and 0.6x P/EV (vs. 2016F EV and 0.5x P/EV previously) to reflect our revised earnings estimates and the Fed’s potential rate hike this year.
China Life Insurance Co., Ltd. is a Taiwan-based company principally engaged in insurance business. The Company provides personal life insurance, personal injury insurance, personal health insurance, interest rate related pension, pension insurance, travel insurance, investment insurances and group insurance, among others. The Company also provides related services, including ordinary services and value-added services. Its ordinary services include the operation of policy loans and contract change, among others. Its value-added services include overseas first aid services, hospital discount and cancer consulting services, among others. The Company is also involved in securities investment, properties investment, foreign investment and loan businesses.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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