【Company Research】Ping An (2318 HK) – Explore the boundless

Throughout years, Ping An has been pushing the boundaries of finance and technology, aiming to become a world-leading technology-powered retail financial services group. Ping An’s “finance + technology” business model constitutes a positive feedback loop to drive secular growth. Its pro-innovation culture, insurance business upgrade, group finance initiatives and potential unlock of more technology value will continue to open new frontiers for Ping An.

 

  • Integrated financial services group. While being a leading player in life and P&C insurance, Ping An also excels in banking, trust, securities and other financial business scope. Integrated financial business model encourages cross-selling and synergies.

 

  • Empowered by technology. Ping An has been standing at the forefront of digital transformation and committed to develop state-of-the-art technologies. Technology has penetrated throughout the Group from front to back to boost business efficiency and customer experience. The Group has also incubated technology unicorns. The five major technology units include Lufax, OneConnect, Ping An Good Doctor, Ping An HealthKonnect and Autohome.

 

  • Retail as a strong growth driver. Thanks to the integrated financial business model and “finance + ecosystem” strategy, the Group’s ecosystems and internet platforms have been a steady source of new customers for the Group’s core business. As of YE19, the Group had 200 million retail customers. In 2019, retail accounted for 92.4% of the Group’s operating profit.

 

  • Fast-evolving corporate culture embracing innovation, speed and expertise constitutes the backbone of Ping An’s success story. Over years, Ping An has been standing at the industry forefront to embrace technological innovations, even disruptive ones. Ping An also adheres to global corporate governance standards, with diversified board to provide professional support and Co-CEO model to perform collective and effective decision-making.

 

  • Valuation. We use SOTP method to value the Group’s life insurance business at 1.24x FY20E P/EV, its P&C insurance business at 1.37x FY20E P/B, its banking/asset management business at 1.28x/1.0x FY20E P/B and its five technology units at RMB 13.61 per share. We therefore derive target price at HK$ 96.06 per share. Initiate with BUY.
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