Ping An’s results are broadly in line. The declines in OPAT and net profit were mainly due to weak equity market returns and higher CoR in the P&C segment. VNB growth grew 21% yoy, beating our expectations, led by margin improvement. Net investment yield dropped to 3.0% and its insurance fund exposure to property was largely manageable. Looking ahead, we continue to expect a mid to high single-digit NBV growth and 20% OPAT growth in 2024. Maintain BUY. Target price: HK$52.00.
KEY HIGHLIGHTS Strategy China And Hong Kong Property A comparison between H-REITs and C-REITs. Results China Tourism Group Duty Free (601888 CH/BUY/Rmb71.72/Target: Rmb106.20) 1Q24: Core profit grew 0.2% yoy; inventories improving; expect further gross margin expansion. iFlytek (002230 CH/HOLD/Rmb41.97/Target: Rmb40.00) FY23 and 1Q24: Earnings missed; dividend of Rmb1.00 for every 10 shares. Jonjee Hi-Tech Industrial & Commercial (600872 CH/BUY/Rmb27.55/Target: Rmb36.10) 1Q24: Results abov...
GREATER CHINA Strategy China And Hong Kong Property A comparison between H-REITs and C-REITs. Results China Tourism Group Duty Free (601888 CH/BUY/Rmb71.72/Target: Rmb106.20) 1Q24: Core profit grew 0.2% yoy; inventories improving; expect further gross margin expansion. iFlytek (002230 CH/HOLD/Rmb41.97/Target: Rmb40.00) FY23 and 1Q24: Earnings missed; dividend of Rmb1.00 for every 10 shares. Jonjee Hi-Tech Industrial & C...
Ping An’s 2023 OPAT sank 20% yoy to Rmb118b, below our and market expectations, dampened by a Rmb20.7b impairment loss in the asset management segment. Life NBV growth was above our expectation but group EV shed 2.4% yoy, affected by the 150bp/50bp downward revision on risk discount rate and investment return assumptions. We adjust our EV/NBV forecasts accordingly and lower our target price to HK$52.00. Maintain BUY.
GREATER CHINA Results Longfor (960 HK/BUY/HK$10.18/Target: HK$12.71): 2023: Better earnings mix and debt structure; continues to optimise development model in 2024. Meituan (3690 HK/HOLD/HK$88.25/Target: HK$80.00): 4Q23: In line; margins pressured by lacklustre AOV and competition in in-store business. Orient Overseas (International) (316 HK/HOLD/HK$99.70/Target: HK$107.70): 2023: Results missed on margin pressure; share price more fairly valued after a sharp 16.7% decline post results. Upgrade ...
KEY HIGHLIGHTS Results Longfor (960 HK/BUY/HK$10.18/Target: HK$12.71) 2023: Better earnings mix and debt structure; continues to optimise development model in 2024. Meituan (3690 HK/HOLD/HK$88.25/Target: HK$80.00) 4Q23: In line; margins pressured by lacklustre AOV and competition in in-store business. Orient Overseas (International) (316 HK/HOLD/HK$99.70/Target: HK$107.70) 2023: Results missed on margin pressure; share price more fairly valued after a sharp 16.7% decline post results. Upgra...
Weak December premium data suggests that insurers kick off “jumpstart sales” without much fanfare under the new regulations. We believe that life insurers will focus more on quality growth over top-line premium growth in order to manage spread risks effectively amid the low interest rate environment. Maintain MARKET WEIGHT on the insurance sector. We prefer regional life insurers over domestic insurers due to the former’s diversified exposures at this juncture. AIA remains our top pick.
Ping An’s 9M23 results were in line, with NBV growing more than 40% yoy and margins improving. The operating and net profit declined by 9.8% and 5.6% yoy as higher underwriting cost due to natural disasters and weaker investment environments weighed on its P&C and asset management business. We find Ping An’s risk-to-reward profile attractive given its strong recovery in life insurance business yet undemanding valuation (-1.6SD). Maintain BUY. Target price: HK$73.00.
KEY HIGHLIGHTS Sector Aviation Airlines: 3Q23 results broadly in line; bottom line turned around in the seasonal peak quarter. Maintain UNDERWEIGHT. Results China Longyuan Power (916 HK/BUY/HK$6.79/Target: HK$7.90) 3Q23: In line; 3Q23 wind power utilisation hours down 34 hours yoy. ENN Energy Holdings Limited (2688 HK/BUY/HK$61.70/Target: HK$72.10) 3Q23 operational data: 3Q23 dollar margin falls to Rmb0.50/cbm. Goldwind Science & Technology (2208 HK/HOLD/HK$3.81/Target: HK$4.00) 3Q23: Below...
GREATER CHINA Sector Aviation: Airlines: 3Q23 results broadly in line; bottom line turned around in the seasonal peak quarter. Maintain UNDERWEIGHT. Results China Longyuan Power (916 HK/BUY/HK$6.79/Target: HK$7.90): 3Q23: In line; 3Q23 wind power utilisation hours down 34 hours yoy. Goldwind Science & Technology (2208 HK/HOLD/HK$3.76/Target: HK$4.00): 3Q23: Below expectations; 3Q23 WTG sales growth slows to +6.0% yoy. Great Wall Motor (2333 HK/BUY/HK$10.82/Target: HK$13.50): 3Q23: Earnings tripl...
Both domestic and regional life insurers delivered strong NBV growth in 1H23 after China's reopening. P&C insurers continued their sustained premium growth with a slight increase in CoR. We expect domestic and regional life insurers’ NBV growth to diverge in 2H23 due to the suspension of higher-rate products in China and the attractive yield in Hong Kong, which is leading to higher growth in the MCV segment. Maintain OVERWEIGHT. Top picks: PICC P&C and Prudential. WHAT’S NEW
GREATER CHINA Strategy Alpha Picks: September Conviction Calls: We focus on stocks with pricing power or sustainable margins against a weakening macro backdrop. Add Giordano, KE Holdings and Trip.com. INDONESIA Strategy Alpha Picks: Underperformance In Aug 23: Our picks: MYOR, BSDE, CTRA, HMSP, BBNI, SMGR and MAPI. MALAYSIA Strategy Alpha Picks: Warming Up For Better Months Ahead: Our Alpha Picks outperformed the FBMKLCI in Aug 23. Sep 23 picks: BUY BURSA, HAPL, HUME, MAHB, Mr DIY, My EG Servi...
Both the MSCI China and HSI fell about 8.5% in August as the lack of significant stimulus announcements dampened market sentiment. The August earnings season also saw relatively conservative management guidance and emphasis on cost efficiencies and asset light strategies. Against this backdrop, we focus on stocks with pricing power or sustainable margins; we add Giordano, KE Holdings and Trip.com to our BUY list.
PICC P&C, Ping An and Prudential delivered impressive interim results, as reflected by strong growth in their premium income and new business value. In particular, the robust demand for saving products from China customers boosted the life insurers’ NBV with double-digit growth. Meanwhile, PICC P&C’s underwriting profit benefitted from the economic reopening and better combined ratio. Maintain OVERWEIGHT. Top picks: Ping An and Prudential.
GREATER CHINA Strategy Alpha Picks: August Conviction Calls: We expect further supportive policies to be rolled out and are adding potential beneficiaries like Baidu, COPH, CR Beer, CR Land, Ping An Insurance and Sands China to our BUY list. INDONESIA Strategy Alpha Picks: Again, An Outperformance In Jul 23: Our picks: MYOR, BSDE, CTRA, HMSP, BBNI, SMGR, MAPI; short ADRO. MALAYSIA Strategy Alpha Picks: Warming Up For Better Months Ahead: Our Alpha Picks underperformed the FBMKLCI in Jul 23. Au...
The HSI rebounded more than 6% in July with the rollout of new policies to promote consumption and investment. The government recognises the need to restore economic confidence and that the demand and supply situation in the real estate market has changed. We expect further supportive policies to be rolled out and are adding potential beneficiaries such as Baidu
Ping An’s 1H23 and June insurance premium increased 7.2% and 12.9% yoy respectively, underpinned by strong demand for savings insurance products and 3.5% life insurance products. Looking ahead, we expect premium growth to soften in 2H23 after the exit of the 3.5% insurance products. The recent disclosure of financial information under IFRS 17 by Ping An shows a smooth transition with minimal impact. Maintain BUY with unchanged target price of HK$70.45.
KEY HIGHLIGHTS Sector Property Politburo softens tone on property sector, calling for adjustment to policies. Results Contemporary Amperex Technology (300750 CH/BUY/Rmb226.35/Target: Rmb410.00) 2Q23: Earnings up 63% yoy and 11% qoq, beating estimates. Maintain BUY. Raise target price from Rmb390.00 to Rmb410.00. Update Ping An Insurance Group (2318 HK/BUY/HK$52.30/Target: HK$70.45) Strong premium growth in 1H23; limited impact under new accounting standard. TRADERS’ CORNER China Resources La...
REGIONAL Sector Plantation: Upgrade to OVERWEIGHT and revise up CPO price assumption for 2024 to RM4,200/tonne. GREATER CHINA Sector Property: Politburo softens tone on property sector, calling for adjustment to policies. Results Contemporary Amperex Technology (300750 CH/BUY/Rmb226.35 /Target: Rmb410.00): 2Q23: Earnings up 63% yoy and 11% qoq, beating estimates. Maintain BUY. Raise target price from Rmb390.00 to Rmb410.00. Update Ping An Insurance Group (2318 HK/BUY/HK$52.30/Target: HK$70.45):...
MSCI China now trades at an undemanding 12-month forward PE of 10.2x, or a 37.0% discount to Emerging Asia. This steep discount is unwarranted and we expect valuation to normalise in 2H23, backed by additional policy support. However, a significant re-rating is only possible if credit growth accelerates; hence, our index target is at 74 points for now, implying 12.0x target PE. We prefer exposure to automobiles, consumer, industrial automation and online gaming. Steep discount unwarranted. We...
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