Hong Kong company reporting season

Ping An’s 1m-strong sales force helps deliver 18pc rise in half-time profit

Strong performances from company’s insurance, banking, wealth management and internet businesses offset 25pc slump in profit at Ping An Securities

PUBLISHED : Thursday, 18 August, 2016, 7:48pm
UPDATED : Thursday, 18 August, 2016, 7:48pm

Ping An Insurance, China’s second largest insurer, reported a better-than-expected 17.68 per cent rise in half-year profit on Wednesday, after the company increased its sales force to more than a million agents to sell more policies.

Its performance, said officials, was also boosted by the company’s banking, wealth management and internet businesses, which helped offset a 25 per cent fall in profit at its investment arm.

Net profit hit 40.78 billion yuan, or 2.28 yuan per share, in the period, up from 34.69 billion last time.

Analysts had been predicting a profit decline of 3 per cent, but the result is still way down on the same time last, when the firm delivered a 60 per cent profit growth compared with the first half of 2014.

Ping An shares have risen 20 per cent in the past six months. They closed at HK$39.7, down 0.4 per cent on Wednesday.

China’s other insurance majors have been warning of a huge drop in profits. China Life, for instance, has suggested its net income could have fallen as much as has 70 per cent in the first six months.

The China Insurance Regulatory Commission said last month that overall industry profit declined 54.05 per cent in the first half to 105.6 billion yuan, as shares prices have fallen sharply in the past year.

Founded and still led by chairman Peter Ma Mingzhe, Ping An conducts life and general insurance business, and also has banking, wealth management, internet finance and health units, and analysts said it’s that diversity that helped the company deliver the strong set of figures.

“Looking ahead to the second half, we expect tighter integration between traditional industries and the internet," said the chairman on Wednesday.

“Financial innovations will spur this value creation, and service upgrades will be crucial to boosting business competition.”

Ping An’s core insurance business was certainly helped by a huge rise in the number of sales agents selling its policies around the country. The firm now has 1.05 million, a 20 per cent increase on last year at this time.

The expanded team’s efforts resulted in the value of its new life business soaring by 42.7 per cent year-on-year to 24.02 billion yuan in the half. Property and casualty insurance premium income reached 83.97 billion yuan, a 2.9 per cent increase, while its automobile premiums rose 14.1 per cent, to 70.695 billion yuan.

Looking ahead to the second half, we expect tighter integration between traditional industries and the internet
Peter Ma Mingzhe, chairman, Ping An Insurance

The company’s Ping An Bank delivered first-half profit of 12.29 billion yuan, a 6.1 per cent year-on-year increase. While internet finance arm Lufax also saw its transaction volume reaching 3.2 trillion yuan in the period, a fivefold increase on last year. Lufax’s registered users increased 27.9 per cent year on year to 23.42 million.

Ping An Doctor, its medical business which has just completed a US$500 million fund raising, now has 89 million users.

Ping An Securities, however, hammered by falling stocks in the past year, saw its profits fall 25 per cent to 1.22 billion, down from 1.61 billion yuan a year earlier. The parent firm last month announced it now plans to spin off Ping An Securities to list in Hong Kong.

Morgan Stanley equity analyst Jenny Jiang said before the earnings announcement that she expected Ping An’s future income to benefit from its recent US$1.6 billion investment in Autohome, an e-commerce auto platform in China

“Autohome has 13.8 million daily mobile visitors which could generate high quality leads for Ping An to cross-sell its car financial products,” said Jiang.