erikywr / ARTICLE

What do you get when Wells Fargo and United Healthcare have a Chinese baby? Ping An Insurance (2318 HK). Ping An is the leading private life and health insurer in China. They also own a bank (Ping An) bank. The company has a reputation for being on the cutting edge of technology and retail distribution of financial products in China. It is a big cap financial with a market cap of $140bn. Ping A first caught my attention in 2024, because I was surprised this former darling had become so lowly valued. The recent sell off in the share price and the positive 1H 2026 results have created another attractive entry point. Ping An's investment portfolio is benefitting from the rise in equity markets and earnings look like they will beat consensus estimates for 2026 and likely 2027. I forecast an EPS of RMB 8.8/share in 2026 and 10.2 in 2027 vs consensus of RMB 8.2 and 8.7. This puts the shares on a 2026 P/E of 5.5x and less than 5x in 2027 with a dividend yield of 5.9%. Longer term Ping A benefits from the aging of China. The demand for saving products and private healthcare. With a 15% ROE in 2027 the shares should be able to trade to HK 120/share (+114%). The negative for insurance stocks in China has been their large fixed income portfolios with are dragged down by the low interest rate environment. European insurers went through the same thing. Ping A bank is also struggling with low interest rates and tepid loan demand, but NPL's remain low at 1%.