CITIC Securities analyst: Buy a target price of 55 yuan in Ping an year

Investor newspaper (reporter Shaw) A-share market on the performance of the speculation trend gradually receded, outstanding performance of the Blue chip led a new round of the rally.　　With the market already up more than 50% per cent this year, funds have been aggressively looking for a valuation depression.　　The research Department of the investor reported that the financial stocks have a higher margin of safety. After the recent bank shares exerting force, whether insurance stocks can also accelerate the pace of the rise? Who is the most valuable investment in three insurance stocks? Observe the recent research report of the brokerage can be found that the securities companies have given China ping higher rating, Citic Securities analyst Huanghuamin Also in the report of the first push China peace. But is the net profit of the first quarter of Ping an fall sharply, still can let investor "safe" profit?　　"Investor" reporter interview Huanghuamin, he advised investors to buy.　　"Investor": three companies in the first quarter of this year's performance is not satisfactory, the insurance industry has been out of the financial crisis, to restore stable growth? Huanghuamin: Insurance is a cycle-resistant industry, the impact of this financial crisis is not big. Last year, the loss of insurance companies mainly from equity investment, including Ping an investment Fortis suffered huge losses, the investment has been included in the 22.79 billion yuan to reduce the value of preparation, 2009 can be "light".　　For the entire insurance industry, underwriting business itself fluctuates little, the fundamentals are very solid. In particular, the insurance industry has the concept of consumer finance in life insurance products.　　As a kind of consumer goods, the purchase of life insurance is usually based on the individual, if the universal and the risk of the two kinds of insurance are high, may lead to large fluctuations in the income of insurance companies, but this volatility is mainly linked to the volatility of the capital market. Look at the performance and valuation of insurance companies, in addition to pay attention to the increase in premiums, should pay attention to the structure of premium, because some of the increase in premiums does not bring more value to the insurance companies.　　The premium structure is divided into individual and bank insurance channels from the product, which is divided into the traditional dividend and the universal insurance, and the different premium structure will make the profit margin vary greatly. In the first quarter of this year, the CIRC released data showing that personal agent channel premiums increased by 15.4%, standard premiums increased by more than 25%, but the entire insurance industry premiums increased to 10%. In fact, the valuation of insurance companies is more concerned with the growth of personal agent channels and standard premiums.　　Future consumer demand for safety and security products will help boost sales of high-margin products and increase the overall value of the industry.　　"Investor": the insurance industry's losses are mainly equity investment losses, then the turning point of the capital market can be the turning point of the insurance industry recovery? Huanghuamin: The performance of insurance companies, the rate of return on investment and the capital market are very strong linkage.　　Current investment in the capital market of insurance funds accounted for the total industry assets of about 10%, last year in the stock market decline and the double impact of interest rate cuts, investment income volatility is relatively large, on the one hand is the stock, on the other hand, once the two markets see bottom basically said the insurance capital investment rate of return In addition to focus on fundingOutside the market, but also pay attention to the issue of spreads, the current interest rate reduction cycle is nearing completion, and the bond market is developing very fast, the former bond investment is mainly investment bonds and financial debt, these sovereign debt interest rates are relatively low, and the CIRC recently pointed out that the insurance funds to invest in local government debt, unsecured debt of the new varieties of bonds,　　These bond varieties yield relatively high yields. At present, China's fixed assets investment maintains high growth, local governments are actively promoting investment to guarantee growth, and the demand for funds will continue to rise. At present, the bond market interest rate is in the upward state, but the policy capital cost remains stable, the insurance company enjoys the profit margin is expected to gradually expand.　　In the future, if there is a recovery in loose monetary policy and active fiscal policy, spreads will basically continue to widen, which is beneficial to the insurance industry's performance and the valuation rebound.　　Investor's report: Will the large losses in Fortis affect the performance of Ping an this year? Huanghuamin: As long as the global economy emerges from the crisis, investment can be victory for peace. Fortis's current price has rebounded relative to last year, and some of the safety of Fortis's investment has not been sold, and last year's losses have all been taken into account and this year is "light".　　If the capital market improves, the original part of the proposed impairment can be reversed, the performance of peace should be very favorable.　　"Investor": You are most optimistic about China's peace in the research report, but from the scale of insurance, Chinese longevity or industry "boss", what are the advantages of peace? Huanghuamin: In terms of premium growth, China's Ping An grew by 41% in April, while the overall market grew by almost 10%, Chinese life grew by 1.8% in March, and the insurance premiums fell by 12.7%.　　At present, the growth of Ping an premium has not been affected by the financial crisis. First of all, a good premium growth and ping An agent of the expansion of the speed of a great relationship, peace Agent team has been expanding, at the end of 2008, 356,000, is currently moving towards the 400,000 goal. And Ping An more than 70% of the premium income from personal agents, life and the Tai Bao only 30%~40%. Personal agent sales of products relative to the relatively stable premium income, higher profit margins. From the future competition pattern of insurance company, the insurance company that takes the personal agent channel as the main marketing way is more resisting pressure, if the commercial bank also runs the insurance business, this kind of marketing mode can resist the impact of other financial institutions.　　In addition, Ping An has maintained a higher settlement rate than the market peers, more attractive to policyholders, and also conducive to the growth of premium income. Second, in the Bank of the channel, Ping An in the three companies accounted for the lowest, so as long as a little bit in the Silver channel products up and down, the scale can be done immediately.　　In the first quarter of 2009, Ping An Bank insurance channel premium income increased by more than 150%, although the recent banking mergers and acquisitions insurance companies are expected to be approved, some of the client resources will be diverted, but the bank intervention is only to make the market grow faster, will not be a big impact on insurance companies ' underwriting sales Third, flatAnn is committed to providing a one-stop service for insurance, banking and investment. The market of personal Consumer financial service is very big in the future, with the growth of personal household wealth, the demand of personal consumption finance will increase gradually. Ping saw such a trend, and the current insurance platform for the development and insurance customers associated business, customer resources can be shared, the financial industry chain every profit can be earned.　　The key to consumer financial products is to establish a trust relationship, the establishment of which is a process, once established can bring great value to the company. The current problem in China is not a problem of excess financial products, but rather a serious shortage of financial products and services, mainly because of restrictions on regulatory systems that do not allow financial institutions to play their own innovative capacity effectively.　　Insurance companies should be in the long-term matching of assets and liabilities, the marketing of insurance products, and constantly expand the scale of management assets.　　In addition, the recent cross sales of Ping An more significant results, cross-selling is through the authorized agent to help companies sell insurance, sell trust products, selling credit cards, to attract and deposit loans customers.　　"Investor": the first quarter of this year, ping an revenue growth of 44% per cent, net profit is down 66%, why income and net profit growth is not proportional?　　Huanghuamin: The main reason for the increase of insurance liability reserve is because of the rapid increase in premiums this year, there is bound to be more reserves, the provision of which is expected to occur in the future, but in fact there is no compensation, so this cost is not actually happening, but the estimated cost. We look at the development of insurance companies are more concerned about the profit margin, the connotation of value, not only from the net assets and EPS (earnings per share) to judge the value of the insurance company.　　The volatility of China's stock market and the rapid expansion of the insurance market lead to a greater volatility of net assets and EPs, which often results in a disproportionate increase in net profit and operating income.　　For example, if there is an increase in the number of bank insurance products being transferred to a product, more reserves are to be accounted for, because the higher the profit margin of the product, the greater the risk of exposure, which requires the withdrawal of more insurance liability reserves;　　"Investor": The higher the insurance company premium Income, the Deji to raise more reserves, once more reserves will be lowered to reduce the profits of enterprises, insurance companies should look for a balance point?　　Huanghuamin: The ratio of reserves to increase the volatility is very high, up to 70% to 80%, low when only 20% to 30%, it is difficult to have a very precise grasp, and reserves this piece and the business structure and business growth. The operation of an insurance company is generally a year of pursuit of scale, a year of pursuit of structure and quality, so its business strategy every year will be like a pendulum back and forth, 2007 China Life Growth is only 7%, 2008 is about 50%, peace is the same, every year there will be fluctuations,　　The logic behind this is that companies want to find a balance between size and structure. The castIn the first quarter of the year, the results were not up to expectations, but the "buy" rating was given, and the net profit growth for life was only "overweight" rating, why? Huanghuamin: This is mainly considering the valuation and future growth potential, EPS indicators are very confusing, the impact of EPS is mainly investment income and reserves.　　Some newly-opened insurers, which have very good policies and structures, have a lot of reserves and poor performance, but if they are based on the value of their content and the value of their new business, these policies are of good quality, but only in terms of profits from the current period. The ratings are different because we look at the company's future growth primarily through new business values, which are discounted values for the future net cash flow of the new sales policy this year. Life's current price implied a new business value of 25 times times, Ping an 15~16 times.　　The current increase in Ping An premium space, after all, it is a medium-sized insurance company, and life market share is already very large, want to maintain the original growth momentum is difficult. There is no stock that can move away from the market, and if the stock market is weak and safe, the shares are at risk. If we do not take into account the impact of the volatility of the capital market, Ping An is expected to reach the target price of 55 yuan this year, there are more than 30% of the rising space, the target new business value multiples of 25 times times.