<Result first take> Ping An (2318 HK, BUY) FY21 results missed with VNB down 24% y-o-y
What’s new:
- Ping An (2318 HK, BUY) announced FY21 result which posted net profits attributable to shareholders of Rmb102bn, down 29% y-o-y, representing 85% and 87% of ours and consensus FY21F earnings estimate.
Our views:
- The earnings missed was due to recognizing an additional Rmb7.3bn of impairment losses on China Fortune Land (600340 CN, NR) investment in 2H21 and a Rmb9.9bn mark-to-market loss from Lufax convertible bond. If the both provisions and losses add back to FY21 net profits, net profits would down 17% y-o-y rather than 29% y-o-y, representing 99% and 102% of ours and consensus FY21F earnings estimate.
- Due to the sluggish market demand and on-going life insurance reform, value of new business (VNB) down 24% y-o-y to Rmb38bn in FY21, missed the market consensus of -20% to -21% y-o-y . VNB margin down 5.5ppt to 27.8% due to more focus on savings product distribution. Number of life insurance agents dropped 41% y-o-y to 600K due to replacing low efficient and low performance agents to pursuit higher agent quality.
- Overall quality of P&C business improved with combined ratio decreased by 1.1 ppt y-o-y to 98.0% in FY21, primary due to optimizing customer mix and enhancing risk screening.
- Ping An Bank (000001 CN, BUY) shown positive results with net profits up 26% y-o-y in FY21 due to solid financing demand from retail customers, robust fee income related to settlement, asset/wealth management products, and improving asset quality trend. NPL ratio was down 16bps y-o-y to 1.02% in FY21.
- Dividend payout at Rmb2.8 per share, representing 8.2% y-o-y growth
- Ping An will host FY21 result briefing on 18 March morning. We will provide more update after attending the meeting. Overall, we maintain BUY on Ping An.