[ET Net News Agency, 24 February 2020] Daiwa Research lowered its target price for Ping
An Insurance (02318) to HK$82 from HK$85 and reiterated its "underperform" rating.
The research house said Ping An management said that its recent reforms will have a
negative impact on 1H 2020 financial performance and that 2021 will be a "normal" year for
Ping An.
Daiwa believes 2020 to see disappointing VNB (value of new business) growth because of
consistent softness in agent numbers and agent income as the group overly emphasises
cross-selling to life agents. In addition, such structural softness in VNB and other
metrics (such as OPAT, operating variance, surrender) are primarily a result of its lower
quality product mix as the contribution of long-term protection products continues to
decline.
Daiwa cut its 2020 VNB growth forecast to 2% from 4% resulting in cuts of 1-3%/2-6% for
2020-21 OPAT/net profit, but given the recent A-share rally, it raised its 2020 net profit
by 7%. (KL)