With More Money to Invest, Ping An Insurance Shines

Gene Linn  |

A popular way to pick China stocks these days is to focus on companies that will benefit new policies emanating from the National People’s Congress this month. That especially seems like a good idea because the Chinese economic recovery that just started seems to be losing a bit of traction, casting a cloud over stocks as a whole. However, investors shouldn’t ignore the fact the economy is still chugging along at better than 7% a year and some big, familiar companies are going to do well.

One of those companies is Ping An Insurance (PNGAY), according to a recent research piece by UOB Kay Hian.

The securities firm makes this suggestion even though the insurance giant recently missed its 2012 consensus earnings target by six percent. The decline was mainly due to losses on investment, as Chinese A-shares went through a tough year. But UOB stated: “Overall operations remained satisfactory with the life segment gaining market share in both 2012 and 2M13.”

Another positive for Ping An is that unrealized losses of available-for-sale (AFS) reserves at the end of 2011 turned into unrealized gains at the end of 2012. Basically this gives the insurer more money to invest.

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The UOB report maintained a “Buy” rating on Ping An, saying that “with a clean AFS reserve into 2013, investment income is likely to see a meaningful recovery for the year as we forecast earnings growth of 54% yoy in 2013.” End


Hong Kong Blue Chips: +215, +1.0%, to 22,256, 3-20-13, Hang Seng Index

Chinese Stocks in Hong Kong: +239, +2.2%, to 10,979, 3-20-13, HSCE Index

Shanghai Stocks: +60, +2.7%, to 2,317, 3-20-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: -2.9, 363.1, 3-15-13, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong blue chips opened below the 22,000 resistance level but Chinese financials led a strong rebound, triggered by a surge in Mainland markets. Small-to-medium banks like Minsheng (CMAKY) outperformed big banks like CCB (CICHY). KGI Research

Quotable: "We reiterate our view that current valuation of the stock market is attractive to long term investors." Guoco Capital. 3-20-13

Brokerages and analysts cited here have disclaimers on their websites emphasizing their statements are for information only. They do not endorse my blog, and I don’t endorse them.

For a list of Chinese companies sold in the U.S. and information on each company go to http://www.adrbnymellon.com/dr_country_profile.jsp?country=CN

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