Hong Kong company reporting season

Ping An Insurance to double dividend as profit soars 43 per cent

China’s second largest life insurer, which has transformed itself into an online financial powerhouse, reported 2017 profit well ahead of forecasts

PUBLISHED : Tuesday, 20 March, 2018, 6:28pm
UPDATED : Tuesday, 20 March, 2018, 11:19pm

Ping An Insurance (Group), China’s second largest life insurer in terms of premiums, has reported a better-than-expected net profit growth of 43 per cent and said it will double its dividend payment.

The insurer reported a net profit of 89.088 billion yuan (US$ 14.075 billion) last year, up from 62.4 billion yuan in 2016. That easily beats the estimates of analysts polled by Bloomberg who predicted a 22 per cent increase to 76.25 billion yuan.

Ping An will raise its dividend per share by 100 per cent year-on-year to 1.50 yuan.

Meanwhile, mainland online insurance broker ZhongAn Online P&C Insurance reported a net loss of 996.36 million yuan (US$152.71 million) in 2017, a loss per share of 0.77 yuan, against a gain of 9.37 million yuan in 2016. It is the first time the online insurer has reported full-year results since its popular IPO in Hong Kong in September when it offered US$1.5 billion in shares for sale.

Online insurer ZhongAn prices Hong Kong IPO at top end to collect US$1.5bn: report

At the time of its IPO, ZhongAn reported a net loss of 202.1 million yuan for the first three months of 2017 and said it expected to see a significant net loss for the whole year because of rising costs and commission payments.

Ping An was founded by Peter Ma Mingzhe 30 years ago. He has expanded the company into internet-related business in recent years, offering online platforms for loans, wealth management, insurance, cars, property and health care.

This has turned Ping An from a traditional insurer into an online financial powerhouse. 

“Technology has enabled us to pursue innovation, boost efficiency, cut costs, improve experience, and manage risks in the financial and health care industries,” Ma said in the results statement.

Ma is also one of the co-founders of ZhongAn, along with Alibaba’s Jack Ma Yun and Tencent’s Pony Ma Huateng.

Ping An’s retail customers in 2017 grew 26.4 per cent to 166 million, and the number of contracts per customer rose 5 per cent.  New customers climbed 20.5 per cent year-on-year to 46.30 million, 40.4 per cent of them online users. 

Its internet users rose 26 per cent during 2017 to 436 million while monthly active users grew 18.7 per cent year-on-year to 73.56 million. On average, each internet user used 2.22 online services, up 14.4 per cent from the start of 2017.

The company’s new life and health insurance business grew 32.6 per cent in value from a year earlier to 67.36 billion yuan, after it increased the number of sales agents 24.8 per cent in 2017 to 1.39 million.

Ping An’s online wealth management platform, Lufax Holdings, became profitable for the first time in 2017. Its assets under management rose 5.3 per cent on the year to 461.7 billion yuan while its loans under management almost doubled during 2017 to 288.43 billion yuan. In January, the company said it would list Lufax in Hong Kong. 

China’s Lufax plans Hong Kong IPO in April at US$60 billion valuation: sources

Ping An Good Doctor, which operates the largest online health care platform in China, has filed an IPO application with Hong Kong Exchanges and Clearing, the bourse operator.

"The multi-year investment in tech has created significant synergies with Ping An's core businesses [such as life, property and casualty, and banking], resulting in higher returns and high growth prospects for these businesses, and hence should be rewarded with higher valuation multiples. In many cases, this is already visible," Goldman Sachs said in a report before the result announcement.

Ping An’s share price closed Tuesday at HK$91.25, down 0.27 per cent, ahead of the results announcement. The share price has doubled in the past year.

“Its share price is supported by market expectation of its spin off of Good Doctor and Lufax this year,” said Ben Kwong Man-bun, a director at brokerage firm KGI Asia, adding that there may be correction in the short term because of the substantial rise in the last year.