Senior investment analyst

Pallavi Deshpande

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/12880" target="_blank" data-smartkarma-citation="entities:12880:1">Ping An Insurance (H) (2318 HK)</a> reported better-than-expected earnings growth of 34% YoY in 1H18. This was driven by its asset management business (operating profits +84% YoY) and fin-tech investments (operating profits 9x). Meanwhile, life insurance operating profit growth of 24% YoY was led by lower reserving requirements (higher interest rates benefit), while tighter regulation of short-term products impacted premium growth negatively. NBV growth of 10% YoY in 2Q18 turned around from the decline seen in 1Q and is driven by a shift from short-term products towards regular products in the telemarketing and internet channels. Meanwhile, asset quality at the bank continues to improve and P&amp;C is driven by increasing share of the higher margin non-auto insurance business. We think Ping An's asset and wealth management business will gain market share as the asset management industry transitions to CBIRCs new rules by 2020 and this will drive a cleanup and consolidation of the sector. </p>

Ping An Insurance (H) (2318 HK) reported better-than-expected earnings growth of 34% YoY in 1H18. This was driven by its asset management business (operating profits +84% YoY) and fin-tech investments (operating profits 9x). Meanwhile, life insurance operating profit growth of 24% YoY was led by lower reserving requirements (higher interest rates benefit), while tighter regulation of short-term products impacted premium growth negatively. NBV growth of 10% YoY in 2Q18 turned around from the decline seen in 1Q and is driven by a shift from short-term products towards regular products in the telemarketing and internet channels. Meanwhile, asset quality at the bank continues to improve and P&amp;C is driven by increasing share of the higher margin non-auto insurance business. We think Ping An's asset and wealth management business will gain market share as the asset management industry transitions to CBIRCs new rules by 2020 and this will drive a cleanup and consolidation of the sector. 

China Pacific Insurance (Group) Co., (601601 CH)

Ping An Insurance (2318 HK) 1H18 Results: Unlisted Fin-Tech Subsidiaries Close to Breakeven