Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Japan Post, Chinese Estates, NIPPO Corp, Hopson/Evergrande, PICC

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This week in StubWorld ...
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<a href="https://www.smartkarma.com/entities/people-s-insurance-co-group-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:362:1" rel="noopener">People's Insurance Co. (PICC) (1339 HK)</a>'s ratio versus <a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty H (2328 HK)</a> is at an all-time low; and the implied stub is around its Covid-low. 
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Preceding my comments on PICC are the weekly setup/unwind tables for Asia-Pacific Holdcos.
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These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.
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This week in StubWorld ...



People's Insurance Co. (PICC) (1339 HK)'s ratio versus PICC Property &amp; Casualty H (2328 HK) is at an all-time low; and the implied stub is around its Covid-low. 



Preceding my comments on PICC are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: PICC (1339 HK)'s All-Time Low Vs. PICC P&C (2328 HK)

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Regulatory Onslaught Continues: The China Banking and Insurance Regulatory Commission (CBIRC) announced that it is investigating Ping An Insurance’ (2318.HK) [Ping An] property investments. Regulatory scrutiny of Ping An is occurring against the backdrop of the country’s skyrocketing real estate market and excessive leverage to the sector. This is on top of the CBIRC’s roll out of the internet insurance revision plan, which aims to scrutinize mainland China’s insurance technology platforms to which Ping An too has exposure; and*Improving Overall Fundamentals: Ping An’s reported 1H21 results of CNY 58.0 bn, declined CNY 16.4 bn (22.0%) HOH related to the above real estate risk. Excluding the real estate write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0% on the back of insurance fundamental improvement nearly across the board.

*Regulatory Onslaught Continues: The China Banking and Insurance Regulatory Commission (CBIRC) announced that it is investigating Ping An Insurance’ (2318.HK) [Ping An] property investments. Regulatory scrutiny of Ping An is occurring against the backdrop of the country’s skyrocketing real estate market and excessive leverage to the sector. This is on top of the CBIRC’s roll out of the internet insurance revision plan, which aims to scrutinize mainland China’s insurance technology platforms to which Ping An too has exposure; and*Improving Overall Fundamentals: Ping An’s reported 1H21 results of CNY 58.0 bn, declined CNY 16.4 bn (22.0%) HOH related to the above real estate risk. Excluding the real estate write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0% on the back of insurance fundamental improvement nearly across the board.

*Weak Results Mask Improving Overall Fundamentals: Ping An Insurance (2318.HK) [Ping An] reported 1H21 results of CNY 58.0 bn, declining CNY 16.4 bn (22.0%) HOH.  Much of the struggle this half appears to be centered in Ping An’s investment portfolio which caused its net investment yield to plummet 80 bp to 4.1%. This resulted in substantial HOH net profit declines of CNY 20.4 bn (40.6%) and CNY 3.0 bn (48.4%) at Ping An Life (PAL) and Ping An Technology, respectively.  Excluding both write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0%; and*Concerns Increase At Bank And With Expansion Plans: Ping An Bank (000001.CH) [PAB] reported 2Q21 reported results of CNY 7.5 bn – decreasing CNY 2.7 bn (26.4%) linked quarter driven by credit concerns and weaker net interest income. In addition, Ping An is investing between CNY 37-51 bn in order to restructure the messy Founder Group, which will no doubt be a distraction for the Group just as fundamentals have begun to turn.

*Weak Results Mask Improving Overall Fundamentals: Ping An Insurance (2318.HK) [Ping An] reported 1H21 results of CNY 58.0 bn, declining CNY 16.4 bn (22.0%) HOH.  Much of the struggle this half appears to be centered in Ping An’s investment portfolio which caused its net investment yield to plummet 80 bp to 4.1%. This resulted in substantial HOH net profit declines of CNY 20.4 bn (40.6%) and CNY 3.0 bn (48.4%) at Ping An Life (PAL) and Ping An Technology, respectively.  Excluding both write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0%; and*Concerns Increase At Bank And With Expansion Plans: Ping An Bank (000001.CH) [PAB] reported 2Q21 reported results of CNY 7.5 bn – decreasing CNY 2.7 bn (26.4%) linked quarter driven by credit concerns and weaker net interest income. In addition, Ping An is investing between CNY 37-51 bn in order to restructure the messy Founder Group, which will no doubt be a distraction for the Group just as fundamentals have begun to turn.

Ping An Insurance – Looking Beyond The Investment Book

ZhongAn Online P&C Insurance C / Equity Bottom-Up

*CBIRC Now Taking On Online Insurers: The China Banking and Insurance Regulatory Commission’s (CBIRC) roll out of the internet insurance revision plan “Notice on Carrying out Special Rectification of Internet Insurance Disorders” aims to scrutinize mainland China’s insurance technology platforms, ordering firms and agencies to end improper marketing and pricing practices, and improve privacy protections; and*Very Negative Implications For Insurers And Broader Market: This move by the CBIRC would intimate the near wipeout of the current generation of online insurers. This regulatory onslaught is stifling innovation and likely push business returns to well below the cost of equity. This heavy-handed approach is causing the outflow of foreign capital from mainland China to be sustainably heavy for an extended period of time.

*CBIRC Now Taking On Online Insurers: The China Banking and Insurance Regulatory Commission’s (CBIRC) roll out of the internet insurance revision plan “Notice on Carrying out Special Rectification of Internet Insurance Disorders” aims to scrutinize mainland China’s insurance technology platforms, ordering firms and agencies to end improper marketing and pricing practices, and improve privacy protections; and*Very Negative Implications For Insurers And Broader Market: This move by the CBIRC would intimate the near wipeout of the current generation of online insurers. This regulatory onslaught is stifling innovation and likely push business returns to well below the cost of equity. This heavy-handed approach is causing the outflow of foreign capital from mainland China to be sustainably heavy for an extended period of time.

ZhongAn Online P&C Insurance – Tapped By The Ugly Stick

China

The People's Insurance Company (Group) of China Limited, through its subsidiaries, offers a range of property and casualty insurance products. The Company also offers asset management services for a variety of customers throughout China.

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People's Insurance (PICC) (1339 HK)

Last Week in Event SPACE: Japan Post, Chinese Estates, NIPPO Corp, Hopson/Evergrande, PICC

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: PICC (1339 HK)'s All-Time Low Vs. PICC P&C (2328 HK)

The current NAV discount and implied stub are around all-time low levels. The market is assigning HK$27.4bn less for the stub ops year to date, and...

David Blennerhassett

Ping An Insurance - Ugggh

PING AN INSURANCE: The CBIRC is investigating Ping An's property investments against the backdrop of the country’s skyrocketing real estate market...

Thomas J. Monaco

Ping An Insurance – Looking Beyond The Investment Book

PING AN INSURANCE: Weak results mask PAI's improving overall fundamentals, as 1H21 HOH declined 22.0% mainly due to investment risk. Excluding the...

Thomas J. Monaco

ZhongAn Online P&C Insurance – Tapped By The Ugly Stick

ZHONGAN ONLINE INSURANCE: The CBIRC has rolled out the “Notice on Carrying out Special Rectification of Internet Insurance Disorders”, ordering...

Thomas J. Monaco

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