Ping An Insurance (Group) of China（601318） Equity Research·Company Research·Insurance II 1 / 9 东吴证券（香港） 请务必阅读正文之后的免责声明部分 [Table_Main] With firm resolution in the critical time, Ping An Insurance expects meaningful recovery Buy (Maintain) Forecast & Valuation 2021A 2022E 2023E 2024E Net profit (RMB mn) 147,961 152,923 157,523 170,432 Growth (YoY %) 6.1% 3.4% 3.0% 8.2% Value of new business (RMB mn) 37,898 31,346 32,422 36,407 Growth (YoY %) -23.6% -17.3% 3.4% 12.3% EVPS (RMB) 76.34 80.14 86.87 94.52 P/EV (X) 0.59 0.56 0.52 0.48 Key words: # reversal effect Investment Thesis ◼ Ping An Insurance enjoys an attribute of positive option value from pandemic control optimization and economic recovery. Its low valuation provides downside protection, and marginally recovering environment leads to valuation elasticity. We believe that recovery of the life insurance industry depends on pandemic control situation in the short-term, team building in the medium-term and products in the long-term. With continuous optimization of pandemic control measures, we expect life insurance sector to experience improvements in both valuation and earnings. While elasticity from the asset side is stronger in the short term, elasticity from the liability side in the long term should test leading insurance firms on reform efficiency. We believe that Ping An Insurance, a pioneer in life insurance reform, has the potential to lead the industry to step out of difficulties. ◼ External environment: Ping An expects meaningful growth due to the upcoming economic recovery. With the implementation of real estate policies, we believe that the policy orientation is completely changed towards keeping market players. We see upside potential for both long-term interest rate and equity market, as optimization of pandemic control measures brings higher expectation for economic recovery and the effect of loose credit manifests. Despite no obvious inflection signal for liability side of life insurance, we see accumulated opportunities. Supply side: though the number of teams for listed insurance firms is still declining, the magnitude is significantly narrowed, and the capacity is continuously recovering. Demand side: thanks to low-interest environment, sales of savings insurance recover due to its comprehensive advantages of safety, profitability, and liquidity. Given the declining returns of competing products and the increasing willingness of residents to save, we expect high-single-digit growth of new orders and values for listed insurance firms in 1Q23, and Ping An Insurance to outperform its peers. ◼ Life insurance reform advances in an orderly manner while renewed logo keeps original aspiration. Ping An upgraded the slogan "Fintech" in the brand identification to "Professional Value", reflecting its pursuit of creating long-term benefits and value for shareholders, clients, employees, and the public. Ping An's talent recruitment plan has achieved initial results. Based on digital tools, its evaluation system focuses on three dimensions of "performance, quality and behavior", with the internal logic of "good behavior supports good quality, which in turn drives good performance", and guides teams to form a positive feedback mechanism of "retention improvement, quality improvement, revenue increase, attract better talents". Ping An’s new bank & insurance team plays an important strategic role in increasing banking revenue, meeting customers' diversified asset allocation needs, and optimizing life insurance channel structure. ◼ Earnings Forecast & Rating: We maintain our original earnings forecast and expect the growth rate of Ping An’s operating profit to be 3.4%/3.0%/8.2% in 2022-2024, NBV growth to be -17.3%/3.4%/12.3%, and benefits of life insurance reform to gradually release from 2023. Using SOTP method, we assign P/EV of 0.76x to the company and maintain the “Buy” rating. ◼ Risks: Lower-than-expected life insurance reform progress, pandemic control optimization, or product side reform effects. [Table_PicQuote] Price Performance [Table_Base] Market Data Closing price (RMB) 44.95 52-week Range (RMB) 35.90/56.23 P/B (X) 0.98 Market Cap (RMB mn) 821,696.85 Basic Data data BVPS (RMB) 45.89 Liabilities/assets (%) 89.67 Total Issued Shares (mn) 18,280.24 Shares outstanding (mn) 10,832.66 [Table_Report] Related reports 《中国平安(601318)： 2022年三季报点评：疫情散发拖累资负两端，关注开门红预期催化》 2022-10-27 《中国平安(601318)：2022年中报点评：队伍质态现拐点 分红增长显韧性》 2022-08-23 Soochow Securities International Brokerage Limited would like to acknowledge the contribution and support provided by Soochow Research Institute, and in particular its employees Xiang Hu (胡翔), Yuxiang Ge (葛玉翔), and Jieyu Zhu (朱洁羽). [Table_Author] 6 February 2023 Research Analyst Ruibin Chen (852) 3982 3212 chenrobin@dwzq.com.hk -28%-24%-20%-16%-12%-8%-4%0%4%8%12%2021/12/012022/04/012022/07/312022/11/29Ping An InsuranceHSI 300