Hong Kong company reporting season

Ping An Insurance raises 2016 dividend payment by 41.5pc on confident outlook

PUBLISHED : Thursday, 23 March, 2017, 8:15pm
UPDATED : Thursday, 23 March, 2017, 10:38pm

Ping An Insurance, China’s largest insurer in terms of market value, said it will maintain a consistent dividend payout policy after it announced a 41.5 per cent increase in dividend payment for 2016.

“While we consider the level of dividend payment, we have to consider our future business growth and profitability. We are confident of our future business growth so that we can keep a consistent dividend payment policy,” said Alex Ren, president of Ping An, at the post results briefing on Thursday.

Ping An on Wednesday announced it would pay a final dividend of 5.5 yuan per 10 shares, bringing the full year dividend to 7.5 yuan per 10 shares in 2016, 41.5 per cent higher than 2015. The total dividend payment is 13.7 billion yuan (US$2 billion), representing 22 per cent of its net profit, compared with 18 per cent in 2015.

The company reiterated that it was still planning to publicly list its internet arm Lufax but declined to confirm if it will list in Hong Kong.

“We are planning for a listing of Lufax and we are open minded to all possibilities. There is no decision on where and when to list yet,” said Jessica Tan, Ping An’s chief operating officer and chief information officer.

The company last year announced a plan to spin off Ping An Securities as a listing in Hong Kong. Ren said the preparation is still ongoing but no details could be announced yet.

He said Ping An increased its investments in Hong Kong stocks in 2016 via the stock connects between the Hong Kong exchange and the two bourses in Shanghai and Shenzhen.

“We have confidence in the Hong Kong market. We will monitor the market situation this year to decide on the investments,” Ren said.

“Property investment would continue to be part of our portfolio,” he added.

Ping An joined in a land tender in Hong Kong for the first time last month when it bid to purchase a residential plot next to the Wong Chuk Hang station offered by MTR Corp, the city’s subway operator. Ping An Real Estate Capital, a unit Ping An Insurance, teamed up with Hong Kong firm Road King Infrastructure and outbid 13 developers, including the city’s largest builders Cheung Kong, Sino Land, Sun Hung Kai Properties and Henderson Land.

While the MTR hasn’t disclosed the size of the winning bid, analysts value the site at between HK$8 billion to HK$9.8 billion (US$1.26 billion), or HK$14,000 to HK$17,000 per sq ft based on a total floor area of 576,950 square feet.

The insurer on Wednesday reported a better-than-expected 15 per cent rise in net profit in 2016 on sales of more policies and a one-off gain 9.5 billion yuan from restructuring.

Net profit last year reached 62.4 billion yuan, or 3.5 yuan per share, up from 54.2 billion yuan in 2015.

“In 2017, complexities will remain in the global economy, with ongoing downward pressure on China’s economy,” said Peter Ma Mingzhe, chairman of Ping An.

“Against this backdrop, Ping An will insist on diversified development.”

The company engages in life and general insurance business, and also has banking, wealth management, internet finance and a health unit.

Ma said it took 30 years to establish such a diversified model that analysts said has helped it beat rivals that rely only on the insurance sector.

“In accessing the current value and growth potential of a retail finance company, three key indicators are customer base, the average number of contracts per customer and average profit per customer. Ping An has sustainable growth in all three,” Ma said.