Strong growth projected for the insurer but fund managers remain cautious
Underwriters have begun pre-marketing for Ping An Insurance's US$1.5 billion initial public offering, armed with strong earnings numbers and robust growth projections.
Fund managers, however, remain wary of the mainland life insurer's loss-making underwriting business.
Morgan Stanley, one of the four underwriters for Ping An, has forecast the company's operating profit to grow 33 per cent to 3.74 billion yuan this year, and 51 per cent to 5.66 billion yuan next year.
Goldman Sachs, another underwriter, offered more conservative projections, saying Ping An's operating profit would increase 25 per cent to 3.51 billion yuan this year and 18 per cent to 4.13 billion yuan next year.
'Increased investment income, decreasing expenses and increased premiums should provide higher earnings,' Morgan Stanley wrote in an IPO research report.
But fund managers said a closer look at the numbers showed the underwriting business of Ping An would still incur losses, due to the negative spread on policies written before 1999.