Date of Report
Thursday, 03 October 2024

Broker Name
UOB Kay Hian

Optimistic New Business Value (NBV) Growth Outlook
Ping An is well-positioned to experience strong new business value (NBV) growth in the second half of 2024. The company is benefiting from significant momentum in its bancassurance channel, coupled with margin recovery. The surge in demand for life insurance products ahead of upcoming pricing interest rate cuts has also contributed to Ping An’s positive outlook.

Beneficiary of China’s Stock Market and Property Stimulus Measures
Ping An is one of the major beneficiaries of recent stimulus packages aimed at boosting China’s stock market and easing the property sector. These initiatives have improved market sentiment, which is expected to address concerns regarding Ping An’s asset management business and the investment returns of its insurance funds.

Valuation and Target Price
UOB Kay Hian maintains a “BUY” rating for Ping An, with an increased target price of HK$64.00. This valuation is based on a higher price-to-embedded value (P/EV) multiple of 0.85x for its life insurance business, up from the previous 0.75x, reflecting improved market conditions and a lower risk-free rate. The new target price implies 0.75x 2024 forecast group embedded value (EV), while Ping An is currently trading at 0.65x 2024F P/EV, in line with its five-year historical average.

Catalysts for Share Price Growth
Several key events are expected to catalyze Ping An’s share price growth, including strong NBV growth, a rebound in operating profit after tax (OPAT) in 2H24, and an improvement in equity market sentiment. These factors are likely to support Ping An’s earnings outlook and enhance investor confidence.

Timeline for Growth
Investors can expect significant developments for Ping An in the second half of 2024, as the company capitalizes on strong NBV growth and favorable market conditions. The combination of improved market sentiment and strong business fundamentals is expected to support further valuation re-rating in the near term.

Investment Outlook
Ping An’s robust new business growth, coupled with improved market conditions in China, positions the company for strong performance in the latter half of 2024. Its favorable valuation and potential for further growth make it a compelling investment option, particularly for those seeking exposure to the insurance and asset management sectors in China.