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德意志银行---中国人寿研究报告
6月19日发布 PDF格式 53页 约900K
China Insurance
Our preference lies with China Life
Mark Kellock,Sophia Lee
More to like about China Life
In this report we differentiate our view between China Life and Ping An, with a
preference for the former and market leader. China Life has underperformed 7% in
2007 while equity markets have risen more than 50%. China Life's NB profit is set
to benefit from margin expansion and we forecast 20% value growth in 2007. The
interest rate environment has improved and could provide the catalyst to become
more positive. We upgrade China Life from Sell to Hold, in preference to Ping An.
The most likely area for upside lies with China’s rising interest rate environment.
Deposit rates have moved between 54bp and 81bp this year and DBs internal
view is that at least one more will occur in 2H07. Should this happen EVs and new
business value will most likely receive an addition boost at year end. We estimate
that a 25bp increase in the investment return assumption will add an additional 9%
in value to China Life and 13% to Ping An.
Based on equity markets to mid June we expect 20%-25% EV growth in 2007
We have factored in equity market gains of 56% during 1H07. This has added
approximately Rmb 23bn and Rmb 12bn to China Life’s and Ping An’s EV. Coupled
with our NB profit growth forecasts of 20% for China Life and 14% for Ping An we
now expected 2007 EVs to expand by 24% at China Life and 22% at Ping An.
Valuations
Our price targets adopt EV techniques based on December 2008 forecasts. We
have upgraded our price targets for China Life to HK$21.7 and Ping An to HK$36.6.
We differentiate the two stocks growth outlook by adopting a new business
multiple of 20x for China Life and 16x for Ping An. Our alternative valuations
methodology using ROEV supports our current price targets. For further detail
refer section headed, ‘Valuations – not the most compelling part of the story’.
Risks
For the sector the greatest risk to earnings, EVs and stock sentiment is: 1/ a
correction in the A-share market; and 2/ rising surrender rates. Rising interest rates
is the biggest upside risk. For more detail refer section headed, ‘The risks to our
EV forecasts and price targets’
Table of Contents
Investment thesis .............................................................................. 3
Interest rates could provide further upside .................................... 4
Equities – Factoring in more capital gains ...................................... 6
Change in new business forecasts................................................... 9
The rural challenge .......................................................................... 15
EV forecasts raised.......................................................................... 20
Valuations – Not the most compelling part of the story.............. 22
The risks to our EV forecasts and price targets............................ 25
China Life Insurance ........................................................................ 27
Ping An Insurance Group................................................................ 29
PICC .................................................................................................. 31
Appendix A – China industry gross written premium.................. 33
Appendix B – Investment restriction changes in 2006 ................. 35
Appendix C - Share price performance.......................................... 37
Appendix D: Price relatives – Relative to market.......................... 38
Appendix E: Price-to-EV.................................................................. 40
Appendix F: New business multiples ............................................ 41
Appendix G: Price-to-book 12mF ................................................... 42
Appendix H: Consensus P/E ........................................................... 44
Appendix I: Embedded value and appraisal value methodology 46
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