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I have received several questions from readers on whether it’s the right time to buy Ping An Insurance (2318 HK / 601318 CH). Here is an attempt to answer that question.
Executive summary
- Ping An is one of the leading life insurance companies in China
- The company’s competitive advantage comes from its million-plus tied agents as well as strengths in technology and underwriting
- The stock is down due to the company’s exposure to a weakening Chinese property market as well as fears about political risks
- Ping An is now trading at a bargain level of around 6.0x P/E - very close to its SOE peers
- While it’s difficult to judge Ping An’s real estate exposure and potential political risks, one should probably lean bullish at this point
Full write-up
Ping An Insurance started as a property & casualty insurer in Shenzhen, China, in 1988. The name Ping An means “peace and security”, suggesting that the company’s insurance products are safe.
The company was founded by Mingzhe Ma in Shenzhen in 1988 as a spin-off from state-owned enterprise China Merchants Group. It was the first Chinese financial group to adopt a shareholding structure.
It was first in several other respects: the first to receive foreign shareholders via Goldman Sachs and Morgan Stanley in 1994. The first Chinese insurer to have an international auditor. And the first to offer investment-linked policies.
