Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

An inquisitive investment analyst with background in both finance and computing. Covering ECM research, biotech, market data analytics.

Asia Pac IPO & Placement Research, China biotech

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

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Equity Capital Markets

China Reinsurance (Group) / Equity Capital Markets

China Reinsurance Corp, the largest reinsurance company in China, launched IPO to sell US$1.8bn new shares. We took a&nbsp;look at China Reinsurance's prospects in three main segment: P&amp;C reinsurance, Life reinsurance and CCIC (primary P&amp;C insurance).<ul><li>While the P&amp;C segment has seen a slow down, its Life segment has grown tremendously. Key opportunities for the company are the under-penetration of Life reinsurance and &nbsp;government's push for higher P&amp;C coverage for strategic sector.&nbsp;</li><li>Key near term challenges are 1) slowing P&amp;C market due to deregulation of car insurance which is only undergoing trial in selected region at this moment and 2) new capital requirement regulation (C-ROSS) coming into effect in 2015 that will impact reinsurance demand.&nbsp;Having said that, China Reinsurance is well capitalized for long term growth.&nbsp;</li><li>Our SOTP model suggest that there is decent&nbsp;upside at the low end and only limited upside at the high end.&nbsp;Our Smartkarma IPO Framework rates the company above&nbsp;threshold for participation. We also note the strong performance of recent IPOs (IMAX China, Regina) and believe that the market has appetite for quality IPOs. Net-net, we will participate in the deal but we would beware of limited upside at high end as well as near term challenges.</li></ul>

China Reinsurance Corp, the largest reinsurance company in China, launched IPO to sell US$1.8bn new shares. We took a&nbsp;look at China Reinsurance's prospects in three main segment: P&amp;C reinsurance, Life reinsurance and CCIC (primary P&amp;C insurance).While the P&amp;C segment has seen a slow down, its Life segment has grown tremendously. Key opportunities for the company are the under-penetration of Life reinsurance and &nbsp;government's push for higher P&amp;C coverage for strategic sector.&nbsp;Key near term challenges are 1) slowing P&amp;C market due to deregulation of car insurance which is only undergoing trial in selected region at this moment and 2) new capital requirement regulation (C-ROSS) coming into effect in 2015 that will impact reinsurance demand.&nbsp;Having said that, China Reinsurance is well capitalized for long term growth.&nbsp;Our SOTP model suggest that there is decent&nbsp;upside at the low end and only limited upside at the high end.&nbsp;Our Smartkarma IPO Framework rates the company above&nbsp;threshold for participation. We also note the strong performance of recent IPOs (IMAX China, Regina) and believe that the market has appetite for quality IPOs. Net-net, we will participate in the deal but we would beware of limited upside at high end as well as near term challenges.

China Reinsurance IPO: Well position to benefit from reform however upside limited at highend