Emile Farsoun

Equity Bottom-Up

PICC Property & Casualty H / Equity Bottom-Up

<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 the largest P&amp;C insurer in China. The stock has been a value trap for over three years. We believe PICC offers a compelling value today, as the company's past value destructive investments in two smaller Chinese banks are behind us, and the prospects for re-rating are likely to occur as fundamentals such as premium growth and underwriting profitability should improve.Moreover, we would expect easing of concerns of slower growth, intensifying competition, declining underwriting profits, low rate environment, equity market risk, digital disruption of the industry and further value destructive investments.Our fair value for PICC is HK$14, based on P/B of 1.7x for a sustainable ROE of 16%.

Picc Property &amp; Casualty H (2328 HK) is the largest P&amp;C insurer in China. The stock has been a value trap for over three years. We believe PICC offers a compelling value today, as the company's past value destructive investments in two smaller Chinese banks are behind us, and the prospects for re-rating are likely to occur as fundamentals such as premium growth and underwriting profitability should improve.Moreover, we would expect easing of concerns of slower growth, intensifying competition, declining underwriting profits, low rate environment, equity market risk, digital disruption of the industry and further value destructive investments.Our fair value for PICC is HK$14, based on P/B of 1.7x for a sustainable ROE of 16%.

PICC P&C (2328 HK): No Longer A Value Trap