5 Big Takeaways From Ping An’s Latest Earnings

Ping An Insurance Group Co of China Ltd’s (SEHK: 2318) latest results demonstrate the strength of its businesses. Here are five key takeaway for investors. – China insurance stocks

Ping An Insurance Group Co of China Ltd (SEHK: 2318) is an integrated financial services provider in China.

It provides insurance, banking, asset management, and internet finance products and services to close to 200 million retail customers. Last week it reported its first-half results for the year ending 31 December, 2020.

In this article, I’ll look at five important points from the latest results announcement.

Overall financials

Before we dig further, let’s have a quick overview of the key financials from the latest earnings release.

Ping An financials

Source: Ping An Insurance’s first-half 2020 earnings presentation

For the first half ended June 30, 2020, Ping An reported an increase in operating profit of 1% to RMB 74 billion (US$10.8 billion).

Yet, net profit fell 30% to RMB 69 billion mainly due to lower investment yield, a result of slumping stock markets, and declining market interest rates.

Major highlights

To start with, its life and health insurance, securities, and technology segments reported higher operating profit year-on-year.

This offset the weaker performance across all other segments – property and casualty insurance, banking, trust, and other asset management.

Next, Ping An Life has actively implemented new technology to cope with the Covid-19 disruptions, as well to advance its business reformation.

One positive outcome here is that Ping An Life’s sales agents recovered in the second quarter of 2020, with the number of sales agents increasing by 1.2% from 31 March, 2020.

Still, its value of new business (VNB) fell by 24.4% year-on-year amid the disruption caused by the virus.

Thirdly, property & casualty’s premium income grew by 10.5% year-on-year despite the Covid-19 pandemic while the combined ratio remained strong at 98.1%.

As of 30 June, 2020, the “Ping An Auto Owner” app had over 109 million registered users, up 17.8% year-on-year.

Fourthly, Ping An Bank quickly resumed business despite the Covid-19 outbreak by advancing online digital operations.

Consequently, revenue increased by 15.5% year-on-year to RMB 78.3 billion in the first half of 2020. Net profit, on the other hand, declined by 11.2% to RMB 13.7 billion amid higher provisions.

Last but not least, Ping An’s technology business had a solid first half driven by revenue improvement in its listed subsidiaries.

These included OneConnect Financial Technology Co Ltd (NYSE: OCFT), which is a software-as-a-service company, and Ping An Healthcare and Technology Co Ltd (SEHK: 1833), a healthcare platform also known as Ping An Good Doctor.

Both companies saw their respective market capitalisations improve by close to, or over, 100% so far in 2020.

Foolish bottom line

Overall, Ping An reported a weaker net profit amid the impact of the Covid-19 outbreak.

Still, it continued to improve on multiple fronts by growing its non-life insurance, banking, and technology businesses.

Moreover, the company increased its interim dividend per share (DPS) by 6.7% year-on-year to RMB 0.80, which is a sign of its strong financial position.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited( 2020

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