At noon today, Yao Bo, CO CEO and CFO of Ping An Insurance (Group) Company Of China Ltd(601318) said at the annual report performance conference that due to the impact of factors such as the fluctuation of the external environment and the periodicity of life insurance in the past year, Ping An Insurance (Group) Company Of China Ltd(601318) share price is indeed undervalued, “I hope the market will give patience and time.” Yao Bo said that China’s economic fundamentals are sound, the measures to stabilize growth have laid a firm foundation for economic development, and he is full of confidence in the long-term improvement of China’s economy Ping An Insurance (Group) Company Of China Ltd(601318) management is also full of confidence in the development of the company and will further improve the fundamentals and market value management in the future
Dividend 43.1 billion Ping An Insurance (Group) Company Of China Ltd(601318) continuously increase cash dividends for 10 years! The dawn of life insurance reform is beginning to appear! What is the new layout in the future?
In 2021, Ping An still handed over an answer sheet of steady progress under the violent fluctuation of the external environment.
On March 17, Ping An Insurance (Group) Company Of China Ltd(601318) disclosed the business performance report of 2021. According to the financial report, the company realized an operating profit of 147961 billion yuan attributable to the shareholders of the parent company, with a year-on-year increase of 6.1% and an operating roe of 18.9%. The net profit attributable to shareholders of the parent company was 101618 billion yuan, a year-on-year decrease of 29%, which was mainly affected by the company’s impairment provision and other adjustments on China Fortune Land Development Co.Ltd(600340) related investment assets.
As the most objective data to measure the operating performance of insurance enterprises, the index of operating profit removes the factors affecting the short-term profit fluctuation, especially the impact of the short-term fluctuation of investment income on the performance.
In terms of split operating performance, in 2021, the life insurance and health insurance business achieved an operating profit of 97.075 billion yuan, a year-on-year increase of 3.6%; The operating roe was 32.3%. The comprehensive cost rate of Ping An Property Insurance was optimized by 1.1% to 98% year-on-year, and the underwriting profit increased by 145.7% to 5.136 billion yuan year-on-year Ping An Bank Co.Ltd(000001) operating performance achieved a year-on-year increase of 10.3% in operating revenue, a year-on-year increase of 25.6% in net profit, a decrease of 0.16% in non-performing loan ratio and an increase of 87.02% in provision coverage ratio compared with the beginning of the year.
In this context, Ping An has always shown its pride in shareholder returns.
On the one hand, the growth of core business promotes the continuous improvement of cash dividend level. In 2021, Ping An distributed dividends to shareholders of RMB 2.38 per share in cash, an increase of 8.2% year-on-year, with a total dividend of about RMB 43.1 billion. It is worth mentioning that this is Ping An Insurance (Group) Company Of China Ltd(601318) consecutive 10 years to increase cash dividends.
Trend chart of dividend per Ping An Insurance (Group) Company Of China Ltd(601318) share in the past 10 years
On the other hand, Ping An is also increasing its repurchase efforts. In August 2021, Ping An launched a 10 billion yuan repurchase plan to repurchase A-Shares of the company at a repurchase price of no more than 82.56 yuan / share. As of the press time of the Chinese reporter of the securities firm, Ping An has repurchased 3.9 billion yuan of A-share shares, and the remaining 6 billion yuan will continue to be repurchased at an opportunity.
It is worth mentioning that ah shares have collectively risen in the past two days. On March 16, Ping An Insurance (Group) Company Of China Ltd(601318) H shares rose 7.98% and A-Shares rose 3.85%; On March 17, Ping An Insurance (Group) Company Of China Ltd(601318) Hong Kong stocks rose more than 10%, and A-Shares rose nearly 3%.
life insurance reform dawns
Compared with the changes in performance data, life insurance reform has seen the dawn, which is the core highlight of Ping An’s annual report.
In 2021, Ping An Life Insurance continued to promote the implementation of the reform strategy of “4 channels + 3 products”. On the channel side, in the face of the industry dilemma of the impact of the decline in the scale of agents on new premiums, Ping An firmly implemented the layered and refined management of agents and vigorously trained the diamond team. In 2021, the annual per capita new business value of agent channel was 39000 yuan, and the per capita first year premium increased by 22% year-on-year.
It is also reported that in terms of diamond team, the per capita first year premium of agents in 2021 is 4-6 times that of the whole team, and the income is about 4-5 times of the average wage level of social workers.
In addition, the three innovation channels, community grid, bank talents and sinking channels, have also achieved parallel development.
Not long ago, Xie Yonglin, general manager of Ping An Group and chairman of the bank, revealed to the media that after the creation of new bancassurance, an important part of Ping An Life insurance reform, the production capacity is more than twice that of the traditional team. During the good start of this year, the medium income of Bancassurance increased by 30% year-on-year.
As the largest insurance enterprise in China, the value of life insurance reform is self-evident. According to Aowei consulting data, compared with developed markets, the penetration of life insurance generally exceeds 15%, and the penetration of life insurance in China is only 8.6%. It is estimated that by 2050, the premium scale of China’s life insurance market will reach 45 trillion yuan. Considering that the current scale of China’s life insurance market is only 3.12 trillion, there is still more than 10 times the development space of China’s life insurance market in the next 30 years. In other words, the continuous promotion of life insurance reform is expected to lay the foundation for the development of Ping An in the next decade or even longer.
The initial success of life insurance reform is inseparable from the support of Ping An digital empowerment and comprehensive financial platform.
As the main driving force of Ping An’s business exploration in recent years, digital upgrading has played a great role in the development of the company. In 2021, the total revenue of science and technology business reached 99.272 billion yuan, a year-on-year increase of 9.8%. By the end of 2021, the number of patent applications for Ping An technology had increased by 7008 compared with the beginning of the year, reaching 38420 in total.
Specifically, Ping An’s use of technology to help the development of financial business is mainly reflected in three aspects: promoting sales, improving efficiency and controlling risks. In terms of sales promotion, Ping an accelerated the integration and application of new technologies and business scenarios such as life insurance to improve productivity efficiency. In terms of efficiency improvement, Ping An uses technology to comprehensively optimize and transform business processes, improve operation efficiency and optimize customer experience. In terms of risk control, Ping An uses cutting-edge technology to enable the analysis engine to improve the quality and efficiency of risk control. For example, in the insurance claim settlement, Ping An can support the underwriting risk identification of 1600 common diseases and the medical insurance claim settlement audit of more than 1500 diseases through OCR, NLP, knowledge map and other technologies, and assist in data information identification and case audit in the nuclear insurance claim settlement. The underwriting efficiency is nearly 30% higher than that of the traditional model, and the claim settlement efficiency is nearly 20%.
In addition to digital empowerment, the benefits of comprehensive finance to this large insurance company must also be mentioned. In 2021, nearly 33.01 million customers migrated between Ping An core financial companies; 89.26 million individual customers hold contracts with multiple subsidiaries at the same time, accounting for 39.3% of the overall individual customers; The average number of customer contracts of the group was 2.81, with a year-on-year increase of 1.8%.
The annual report shows that the scale of comprehensive financial premium of corporate channels increased by 19.9% year-on-year, and the scale of comprehensive financial financing increased by 26.9% year-on-year.
Chinese version of “United Health” is approaching
The smooth progress of life insurance reform is largely due to the empowerment of Ping An medical and health ecosystem. Over the past few years, Ping an ecosystem has focused on science and technology, vertically and horizontally connected the government, users, service providers and payers, leveraging the core resources of hospitals, doctors and medical treatment to maximize value.
Among them, Ping An health, as the traffic entrance of online medical services, has laid an ecological foundation for the group by integrating online + offline resources.
By the end of December 2021, the cumulative number of registered users of Ping An health had reached 423 million. In 2021, the cumulative number of paying users reached 38 million, and the operating revenue increased to 7.334 billion yuan in 2021, with a gross profit margin of 23.3%.
In terms of offline channels, by the end of December 2021, the company had cooperated with about 3600 hospitals, of which the third class hospitals accounted for more than 50%; The number of cooperative pharmacies is 202000, covering about 34% of pharmacies in China.
With the completion of the construction of medical ecology, the synergy between insurance business and medical services is gradually emerging.
The data show that among Ping An’s more than 227 million individual customers, nearly 63% of the customers use the services provided by the medical and health ecosystem at the same time, with an average number of customer contracts of 3.3 and an average AUM of 40000 yuan, which are 1.6 times and 3.0 times that of individual customers who do not use the medical and health ecosystem services respectively.
This may mean that Ping An is one step closer to becoming the Chinese version of “United Health”.
Some industry observers believe that if it becomes the Chinese version of “United Health”, it will undoubtedly greatly improve the value of Ping An. The “insurance + HMO” model will greatly increase the value of traditional life insurance companies in terms of performance and valuation.
In 2020, the total revenue of United Health’s health insurance business was US $257.1 billion, a year-on-year increase of 6%. The total revenue of the non insurance business segment was US $136.3 billion, a year-on-year increase of 21%, and the revenue contributed to the group has exceeded 50%. Among the three businesses in the non insurance business sector, health management grew the fastest, with a year-on-year increase of 29% in 2020.
Service has become the main growth point of this insurance company, and the growth rate of its traditional insurance business is only 12%. In the five years from 2016 to 2020, the compound annual growth rate of United health revenue was 8.61%, and the compound growth rate of roe was 20.20%, which was much higher than that of traditional insurance companies.
The latest data show that the P / E ratio of United health is 27.12 times and the P / B ratio is 6.53 times. If we can get closer to the Chinese version of “United Health”, the potential valuation improvement space of the insurance giant is also considerable.
Ping An seizes the air outlet of home-based elderly care
Speaking of the future layout of Ping An, the pension industry is also a very important observation window.
On March 1, 2022, Ping An home-based elderly care service system was fully listed. Relying on the advantages of Ping An Group’s medical and health ecosystem, the service integrates social high-quality elderly care resources, aims at the nine pain points of home-based elderly care for the elderly, and creates a one-stop elderly care service for the elderly with an exclusive housekeeper, 10 service scenarios and a set of supervision system.
It is not difficult to understand the reasons for Ping An’s efforts in the elderly care industry. With the acceleration of China’s aging process, the proportion of the elderly population is increasing in recent years.
According to the results of the seventh national census of the National Bureau of statistics, China has 264 million people aged 60 and over and 191 million people aged 65 and over, accounting for 18.70% and 13.50% of the total population respectively. The proportion of people aged 60 and 65 in the total population increased by 6.79 percentage points and 5.44 percentage points respectively compared with 2010.
Different from foreign countries, home is still the mainstream choice for most Chinese elderly people. According to Wang Haidong, director of the Department of aging and health of the National Health Commission, most of the elderly in China provide for the aged at home and in the community, forming a “9073” pattern, that is, about 90% of the elderly choose to provide for the aged at home, about 7% of the elderly rely on community support for the aged, and 3% of the elderly live in institutions for the aged.
In addition to the blowout of market demand, the promotion at the policy level is also an important reason for Ping An to choose home-based elderly care. On February 21, the national plan for the development of the cause of aging and the elderly care service system in the 14th five year plan was released, which defined nine specific tasks, including strengthening the elderly care service capacity of home-based communities and improving the elderly health support system.
In the face of the huge opportunities of the pension industry, many players such as real estate, science and technology Internet enterprises have also entered the game. Where are the advantages of Ping An?
the consensus of the industry is that the unique mode of “Finance + medical treatment + health care” and strong resource integration ability are precisely the advantages of Ping An in realizing differentiated development
Thanks to the accumulation of many years of scientific and technological resources, including medical insurance, as well as medical insurance. Up to now, Ping An has 30 years of medical and health experience and has accumulated the world’s largest five medical libraries, covering more than 30000 diseases.
At present, Ping An, as a leading insurance enterprise, is trying to copy the mode and experience accumulated in the layout of health care community to home care. In a sense, Ping An’s exploration in the field of home-based elderly care is also another practical landing of its insurance + model.
With the completion of low hanging large-scale fruit picking, China’s economy has come to a new stage of seeking high-quality and stable growth, and the insurance industry is also facing transformation and upgrading. In this context, Ping An’s exploration in the field of home-based elderly care and the insurance + model behind it have great reference value for the whole industry.
