Hong Kong company reporting season

Ping An’s profit up 15pc in 2016 from one-off gain, more insurance sales

PUBLISHED : Wednesday, 22 March, 2017, 9:24pm
UPDATED : Wednesday, 22 March, 2017, 11:39pm

Ping An Insurance, China’s largest insurer in terms of market value, reported a better-than-expected 15 per cent rise in net profit in 2016 on sales of more policies and a one-off gain from restructuring.

Net profit last year reached 62.4 billion yuan (US$9.1 billion), or 3.5 yuan per share, up from 54.2 billion yuan in 2015.

The results beat a consensus forecast of 11.7 per cent growth by analysts polled by Thomson Reuters, but was still below 2015 when the insurer posted a 38 per cent year on year growth in profits.

The earnings last year include a one-off 9.5 billion yuan gain from internal restructuring. Excluding this, Ping An’s net profit in 2016 would have dipped 2 per cent to 52.9 billion yuan.

In May, Ping An Insurance integrated micro-financing platform Puhui Financial and institution-focused Shenzhen Qianhai Financial Asset Exchange (QEX) into Lufax, China’s largest peer-to-peer lending platform, and booked a 9.5 billion yuan gain. This was aimed at streamlining the group’s online financing business, with brokers believing it was to prepare Lufax for an initial public offering.

Ping An shares fell 2 per cent to close at HK$43.25 on Wednesday, compared with a 1.1 per cent fall in the benchmark Hang Seng index.

Brace for bad news from Chinese insurers this reporting season

The company is expected to be the only major Chinese insurer to have seen profit growth last year as its rivals have issued warnings of huge drops in earnings. China Life, for example, has suggested its net income could have fallen by 40 to 50 per cent.

Founded and still led by chairman Peter Ma Mingzhe, Ping An engages in life and general insurance business, and also has banking, wealth management, internet finance and a health unit – a diversified model that analysts said has helped it beat rivals that rely only on the insurance business.

“For the financial industry, it was a year of deep reform and multiple challenges. During the past year, we maintained stable growth that outperformed the market,” Ma said in the result statement on Wednesday.

Ma said Ping An would focus on providing personal financial and health care services and would cross sell products among its different business lines.

The company had 131 million customers at the end of 2016, up 20 per cent year on year, while its internet finance users grew 43 per cent year on year to 346 million.

For the financial industry, it was a year of deep reform and multiple challenges
Ping An chairman Peter Ma Mingzhe

Ping An’s core insurance business was boosted by a 28 per cent increase in number of sales agents to 1.1 million. The expanded team’s efforts resulted in the value of its new life business in 2016 jumping 32 per cent year on year to 50.8 billion yuan.

Property and casualty insurance premium income reached 177 billion yuan, representing an 8.7 per cent increase.

The company’s Ping An Bank booked a net profit of 22.6 billion yuan, a 3.4 per cent year-on-year increase.

Its internet finance arm Lufax saw its transaction volume reaching 5.7 trillion yuan last year, up 280 per cent from a year earlier.

However, Ping An Securities, hammered by falling stock values in the past year, saw its profit fall 12 per cent to 2.2 billion yuan, down from 2.5 billion yuan a year earlier. The parent company said mid last year that it planned to spin off Ping An Securities and list it in Hong Kong.

“Though we like Ping An’s long-term ambitions and investment in the conglomerate retail financial services model, we believe it will take some time for success,” said Leon Qi, an analyst at Daiwa Capital Markets.