DBS: ZhongAn Online P & C Insurance Co Ltd – Buy HK$35.00
alanyeo
<News Alert> 1H22 profit warning: expect to record net loss in 1H22 due to market volatility, FX losses and impact from IFRS 9 adoption
Zhong An issued a profit warning and expect 1H22 earnings to incur net loss of Rmb 650-750m, compared to net profit of Rmb 604mn for 1H21
The expected net loss is primarily due a) poor investment income performance as impact by capital market volatility, b) impact from IFRS 9 adoption which result in mark-to-market losses in its investment, and c) incur exchange losses of Rmb300-400m on its USD-denominated bonds given USD appreciation
Underwriting business remains on an improving track, with combined ratio expect to continue to see y-o-y improvement
Market consensus expects Zhong An’s net profit to reach Rmb 1bn in FY22, we see downside risk in ours and consensus forecast.
We expect share price to be weak in the near term.
