德意志银行的中国保险行业分析-04年10月份

AsiaPacificChinaInsurance8October2004Where’sthevalueinnewbusiness?MarkKellock(852)[e-mail]uranalysisofpotentialNBprofitforFY04issupportiveofour25%growthassumptionforChinaLifeandHK$5.10pricetarget.However,followingaweak1H04result,PingAnisatriskoffallingshortofour10%growthassumption.ThisrepresentsdownsiderisktoourcurrentsharepricetargetofHK$10.25andreinforcesourSellrating.DeutscheBankAGDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1ChinaInsuranceSectorStrategyToppicksChinaLifeInsuranceHoldPingAnSellPICCHoldKeychangesNACompaniesfeaturedChinaLifeInsurance(2628.HK),HK$5.15Hold2003A2004F2005FP/E(x)26.020.915.3EV/EBITDA(x)NANANAPrice/book(x)2.892.161.93PingAn(2318.HK),HK$12.00Sell2003A2004F2005FP/E(x)NA23.817.7EV/EBITDA(x)NANANAPrice/book(x)NA2.642.33PICC(2328.HK),HK$2.82Hold2003A2004F2005FP/E(x)23.020.715.1EV/EBITDA(x)NANANAPrice/book(x)2.461.801.66Industrylifepremiums05,00010,00015,00020,00025,00030,00035,00040,000Jan-03Mar-03May-03Jul-03Sep-03Nov-03Jan-04Mar-04May-04Jul-04-10%0%10%20%30%40%50%60%70%Lifemonthlypremiums(Rmbm)(LHS)GrowthYOY(RHS)Chinainsurancepricemoves5Days%1Mth%3Mth%ChinaLife5.19.013.8PingAn3.110.9NAPICC1.812.0-5.9UpcomingeventsDateChinaAccessConferenceBeijing28Feb-3Mar2005RelatedrecentresearchDateChinaInsurance:Interestyieldimpact?MarkKellock28Sep2004KoreanRe:Nowforthehardpart;initiatingwithaSellJohnLee26Aug2004PICC:Near-termpositiveshardtofind;maintainHoldMarkKellock16Jul2004PingAn:Littleleftonthetable;initiatingwithaHoldMarkKellock14Jul2004GlobalEquityResearchIndustryUpdateBottom-upanalysisofNBprofitInthisreportwefocusonNBprofit–acriticaldriverofvalueforlifeinsurancestocks.WehavemadeestimatesforNBsalesandmarginstoderivepotentialNBprofitgrowth.OuranalysisisbuiltonaFY04forecastindustrygrosspremiumof12.5%growth.Viamarketshare,renewalpremiumandmixofbusinessprospectsweprovideanoutlookforNB.RisktosharepricetargetsOurcurrentsharepricetargetsfactorinFY04FNBprofitgrowthof25%forChinaLifeand10%forPingAn.OuranalysissuggestsourassumptionforChinaLifeisfairlystruck.However,ouranalysisofflatNBgrowthforPingAnsuggests6%downsidetoourcurrentsharepricetarget.ValuationWecontinuetofavourlifeinsurersoverP&CcompanieswithintheChinaspace.ChinaLife(Hold,HK$5.10pricetarget)remainsourpreferredpick,albeitfullyvalued.PingAn(Sell,HK$10.25pricetarget)appearsovervaluedandexpensivevs.itssectorpeers.Weseelittlenear-termjoyforPICC(Hold,HK$2.70pricetarget).RisksKeyriskstoourinvestmentthesisoverthemediumterminclude:1)aslowdowninpremiumgrowth;2)afallinequitymarkets;3)regulatoryrisk;and4)asustainedincreaseininterestrates.Figure1:ChinainsurancestocksCompanyPrice(5Oct04)StockcodeRatingSharepricetargetUpside/downsidetosharepricetargetChinaLifeHK$5.152628.HKHoldHK$5.101%PingAnHK$11.702318.HKSellHK$10.25-12%PICCHK$2.802328.HKHoldHK$2.70-4%Source:DeutscheBank8October2004InsuranceChinaInsurancePage2DeutscheBankAGTableofContentsSectoroverview.................................................................................3Outlook........................................................................................................................3Valuation......................................................................................................................3Risks............................................................................................................................3Impactofnewbusinessonstockvaluations..................................4Sensitivityofourpricetargettonewbusinessprofitgrowth.....................................4Conclusion–riskstonewbusinessprofitgrowthassumptions.................................5Newbusinesstrends.........................................................................7Who’swinningandwho’slosing................................................................................7Producttrends–shiftbacktowardsregularpremiumproducts.................................8Profitmarginimpact....................................................................................................9Grosspremiumexpectations.........................................................112H04Fandfull-yearpremiumincomepredictions....................................................11Newbusiness:2004outlook...........................................................14Howdoindustrygrosswrittenpremiumstranslateintonewbusinesssales?........14Theimportanceofnewbusiness..............................................................................18Globalinsurancevaluations...........................................................20Globalinsurancepriceperformance..............................................228October2004InsuranceChinaInsuranceDeutscheBankAGPage3SectoroverviewOutlookTheoutlookfornewbusiness(NB