2016年3季度净利润同比增长15％； 2016年首9个月利润同比增长17％

>> Employed by a non-US affiliate of MLPF&S and is not registered/qualified as a research analyst under the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Merrill Lynch entities that take responsibility for this report in particular jurisdictions. BofA Merrill Lynch does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 8 to 11. Analyst Certification on page 5. Price Objective Basis/Risk on page 5. 11679143 Ping An Insurance 3Q16 net profit up 15% YoY; 9M16 profit up 17% YoY PO: 52.26 HKD | Price: 40.50 HKD Equity | 28 October 2016 Stable earnings delivery in 9M16 Earnings in 9M16 achieved 95% of our/consensus full-year estimates. For 4Q16, we expect sustainable earnings YoY growth given low base in 4Q15. Life’s VNB growth was strong at 48% YoY in 9M16 (66% YoY in 3Q16), with margin improvement (31% in 9M on FYP base vs 28% in 1H16 and 29% in FY15). The better quality of growth also reflects the improvement in Life’s core solvency margin (216% in 3Q from 207% in 2Q) More reserve catch-up, better buffer in 2017 earnings Ping An made an extra RMB8bn reserve catch-up in 3Q in response to 750-day average CGB yield decline. For 9M16, total extra reserve was RMB17bn. We estimate the company only needs to have an extra reserve of about RMB10-12bn for 750-day CGB decline in 9M16 (down 20bp). So we believe Ping An likely booked more reserve than it needs. While insurers will face even bigger reserve pressure in 1H17 (750-day CGB will fall about 30bp in 1H17), the extra reserve Ping An has made in 2015-16 should leave stronger buffer for a smooth earnings in 2017. We maintain our view that Ping An’s earnings will be relatively stable than pure life insurance peers. Maintain Buy rating. P&C combined ratio stable; no immediate fund needs at Bank Combined ratio deteriorated by 50bp YoY to 94.9%, due to the cease of profitable credit guaranteed insurance; relatively speaking, Ping An’s combined ratio remained the lowest among peers. Bank earnings grew 5.5% YoY in 9M and T1 ratio was at 9.67%, above the minimum requirement of 8.5%. There is no immediate equity-raising need from the bank. Better investment performance in 3Q16 Recurring investment yield (NII + cash dividend + rental income) increased 40bp YoY to 6.0% in 9M16 vs 5.6% in 9M15. Ping An sees further recurring yield improvement in 3Q, but there was no detailed disclosure. Total investment return declined to 4.9% in 9M16 vs 7.8% in 9M15 due to lower capital gains in 1H. Estimates(Dec) (CNY) 2014A 2015A 2016E 2017E 2018E Reported Net profit (mn) 39,279 54,203 58,432 50,372 52,837 Net profit growth 39.51% 37.99% 7.80% -13.79% 4.89% EPS (HKD) 3.10 3.56 3.64 3.23 3.39 Book value per share (HKD) 20.49 21.83 23.79 27.15 29.93 DPS (HKD) 0.52 0.64 0.65 0.58 0.61 Valuation (Dec) 2014A 2015A 2016E 2017E 2018E Price to book value 2.23 1.93 1.69 1.53 1.38 PER 13.14 11.38 11.06 12.83 12.23 Dividend yield 1.27% 1.57% 1.62% 1.39% 1.46% P/EV 1.25 1.12 0.99 0.83 0.72 Implied new business multiplier 5.17 2.18 -0.10 -2.42 -3.95 Katherine Hu >> Research Analyst Merrill Lynch (Hong Kong) +852 3508 2568 katherine.hu@baml.com Gigi Chen >> Research Analyst Merrill Lynch (Hong Kong) +852 3508 7152 gigi.chen@baml.com Stock Data Rating (H Share) BUY Rating (A Share) BUY Price (H Shr / A Shr) 40.50 HKD / 34.19 CNY Price Objective 52.26 HKD / 41.34 CNY Date Established 12-Sep-2016 / 12-Sep-2016 Investment Opinion B-1-7 / C-1-7 52-Week Range 30.50 HKD- 46.70 HKD 52-Week Range 27.81 CNY- 37.88 CNY Mkt Val / Shares Out (mn) 101,459 USD / 18,280.2 Market Value (mn) 786,964 HKD Average Daily Value (mn) 149.68 USD Free Float 60.0% BofAML Ticker / Exchange PIAIF / HKG BofAML Ticker / Exchange XPSPF//SHH Bloomberg / Reuters 2318 HK / 2318.HK Bloomberg / Reuters 601318 CH / 601318.SS ROE (2016E) 13.1% Net Dbt to Eqty (Dec-2015A) NA Timestamp: 27 October 2016 12:27PM EDTUnauthorized redistribution of this report is prohibited. This report is intended for ivandu@fuhhwa.com.hk 2 Ping An Insurance | 28 October 2016 iQprofile SM Ping An Insurance Company Sector Insurance - Multi-line Company Description Ping An Insurance Group, listed in 2004, is the only financial conglomerate in China with life insurance, non-life insurance, securities company, trust company, and bank subsidiaries. The company was first founded in 1988 in Shenzhen as a non-life insurance company. It gradually shifted its focus to the life insurance industry in 1994, and has become the second largest life insurer with around 17% and 11% market share respectively in 2006. Investment Rationale We believe that t