On Tuesday, Jefferies issued a new assessment for Ping An Insurance (2318:HK) (OTC: PNGAY), downgrading the company's stock from Buy to Hold, while simultaneously raising the price target to HK$48.00, up from the previous HK$44.00. The revision follows Ping An Insurance's third-quarter earnings report.
The company's operating profit after tax (OPAT) for the third quarter of 2024 reached Rmb35.3 billion, marking a 22% increase year-over-year but an 11% decrease quarter-over-quarter. This performance was 12% below Jefferies' expectations.
The life insurance segment of Ping An showed an 8% growth year-over-year and a 2% increase quarter-over-quarter, which was partly attributed to a lower comparative base from the previous year. The value of new business (VNB) saw significant growth, with a 110% increase year-over-year and a 34% rise year-to-date in the third quarter.
However, the property and casualty (P&C) insurance segment did not meet expectations, despite posting a 464% increase year-over-year from a low base. It experienced a 32% drop quarter-over-quarter, which was unexpected given the robust market in September. Additionally, the asset management (AM) division reported a loss of Rmb3.6 billion.
Ping An's share price had surged by 40% since late September, bolstered by a market rally. However, Jefferies points out that the marginal improvements in the company's performance have already been factored into the stock price, leading to the decision to downgrade the rating to Hold.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Ping An Insurance's financial performance and market position. The company's market capitalization stands at $144.66 billion, reflecting its significant presence in the insurance industry. Ping An's P/E ratio of 11.16 suggests that the stock may be reasonably valued compared to its earnings.
InvestingPro Tips highlight Ping An's strong dividend history, having maintained dividend payments for 18 consecutive years and raised them for 7 consecutive years. This consistent dividend policy aligns with the company's stable financial position, as evidenced by its profitability over the last twelve months.
The stock's recent performance has been particularly noteworthy, with InvestingPro data showing a 34% price total return over the past month and a substantial 65.09% return over the last six months. These figures corroborate Jefferies' observation of the 40% surge since late September, providing context for the recent downgrade to Hold.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Ping An Insurance, providing a deeper understanding of the company's financial health and market position.
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