- BUY Entry – 56.1 Target – 63.5 Stop Loss – 52.1
- Ping An Insurance (Group) Company of China, Ltd. is a personal financial services provider. The Company provides insurance, banking, investment, and Internet finance products and services. The Company operates its businesses through four segments. The Insurance segment provides life insurance and property insurance, including term, whole-life, endowment, annuity, automobile and health insurance. The Banking segment is engaged in loan and intermediary businesses with corporate customers and retail business. The Assets management segment is engaged in security, trust and other assets management businesses, including investment, brokerage, trading and asset management services. The Internet Financing segment is engaged in the provision of Internet finance products and services.
- Expecting monetary and fiscal stimulus soon. China’s Caixin general manufacturing PMI dropped to a 25-month low of 48.1 in March, and the Caixin general services PMI also plunged to a 25-month low of 42.0. This was due mainly to the surge in widespread COVID infections and multiple cities lockdowns. Hence, 1Q22 GDP growth could be negative. The implication is that China’s government will probably further lower key rates and propose a fiscal stimulus plan to avoid a recession in 2Q22. The real estate market is the pillar to uphold the economy. Some local governments have started to overturn the old restrictive rules to revive property sales. In the near term, we could see further relief in the domestic housing market.
- A Proxy of a property developer fund. Given Ping An’s large exposures to property developers, including equities and bonds, its share price performance closely relates to the HK-listed property developer sector price movements. Currently, the sentiment toward the sector started to turn positive.
- The updated market consensus of the EPS growth in FY22/23 is 27.9%/15.2% YoY respectively, which translates to 6.3x/5.5x forward PE. The current PER is 8.1x. .The FY22F/23F dividend yield is 5.3%/5.8%. Bloomberg consensus average 12-month target price is HK$77.87.
Ping An Insurance (Group) Company of China, Ltd. (2318 HK) (Source: Bloomberg)