Company Introduction

Ping An was established in 1988 in Shenzhen, which is the first joint-stock insurance company in China, Ping An's core businesses include insurance, banking and investment. According to premiums incomes in Oct 2012, Ping An Life and P&C are both ranked as the second largest in China. Ping An was ranked No.131 in the Financial Times Global 500 list in 2012.

Summary

-Ping An (or “the Group”) will announced 2013 results next month, and according to its 3Q2013 results, as at the end of Sep 2013, the gross premiums amounted to RMB204.531 billion, up 13.69% y-y, and the growth maintained stable. Especially, in 2014, the Group's premiums increased significantly, and therefore we believe the growth of premium in 2014 will be slightly higher than that of 2013. According to the lasted data, as at the end of Jan 2014, the accumulated premiums of the Life and P&C insurance of Ping An increased strongly by 44.77% and 33.65% y-y to RMB37.236 and 15.417 billion respectively;

-During the period, Ping An's assets raised stably, by the end of Sep, the Group's total assets increased by 14.22% to RMB3.25 trillion compared to the end of 2012, equivalent to the BVPS of RMB22.74, up 12.75%;

-The Group's accumulated net profits achieved to RMB29.288 billion, up 45.10% y-y, much higher than our previous expectation mainly due to the strong growth of investment incomes affected by the improvement of the market in the first three quarters of 2013. Net investment incomes amounted to RMB41.840 billion, up significantly 117.83% y-y. However, we believe the growth rate of investment gains would decrease in 4Q2013 due to the large volatility in the market, but will also be over 100% in 2013;

-In summary, the profit performance of Ping An was better than our expectation and the Group's business structure would continue to be improved under the strategy of “Banking, Insurance, Investment”, and the comprehensive synergistic effect improved obviously. Moreover, after the completion of internal equity capital raising in Ping An Bank, the CAR will increased obviously and the profit contribution will go up for the Group in future. Additionally, the incomes will maintain the stable increase under the improvement of market environment, and therefore we have confidence in Ping An's future development and increase the profit estimation in the next two years. However, although the share price dropped largely affected by the market recently, we increase the 12-m TP to HK$80.00, 27% higher than the current price, equivalent to 13.7xP/E and 2.3xP/B in 2014 respectively, the valuation is attractive. Maintain Buy rating.

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