Company Introduction

Ping An was established in 1988 in Shenzhen, which is the first joint-stock insurance company in China, and core businesses include insurance, banking and investment. According to premiums incomes in 2013, Ping An Life and P&C both ranked as the second largest in China, and became a Global systemically Important Insurer. Ping An ranked No.181 in Forture Global 500, maintained No.1 in the non-SOE category in China, and also ranked No.137 in the Financial Times Global 500.

Summary

-Ping An (or “the Group”) announced 2013 results last weekend, and the results met our previous expectation, as at the end of 2013, gross premiums amounted to RMB269.051 billion, up 15.01% y-y, and net premiums increased by 12.18% y-y to RMB 248.017 billion, maintained stable growth. In 2014, we believe the Group's premiums will increase faster than that of 2013 due to the development of the market, and 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;

-Ping An's assets also maintained stable growth, its total assets increased by 18.1% to RMB3.36 trillion compared to the end of 2012, and net asset increased by 14.5% to RMB182.709 billion, equivalent to the BVPS of RMB23.08;

-The Group's accumulated net profits achieved to RMB28.154 billion, up 40.42% y-y, mainly due to the strong growth of incomes affected by the improvement of the market in 2013, especially for commission fees and investment incomes, increased by 45.21% and 103.02% y-y to RMB15.815 billion and RMB55.583 billion respectively. However, net interest incomes from the banking business, the largest part of non-premiums, increased by 24.63% y-y to RMB93.291 billion;

-In summary, the profit performance of Ping An in 2013 met our expectation. The Group's business structure would continue to be improved under the strategy of “Banking, Insurance, Investment”, and meanwhile, it pays close attention to develop E-financial business, and integrate its businesses to realize one-stop comprehensive service under mobile platform. We believe Ping An's profits will maintain stable increase in future but the growth rate will go down, and therefore we cut the profit estimation slightly in the next two years. Although the share price dropped largely affected by the market recently, we maintain the 12-m TP to HK$80.00, 33% higher than the current price, equivalent to 13.9xP/E and 2.4xP/B in 2014 respectively, the valuation is attractive. Maintain Buy rating.

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