Stock Idea After the fall of China Fortune Land and Evergr | FSMOne SG - Research Highlights

Stock Idea

After the fall of China Fortune Land and Evergrande, what’s next for Ping An Insurance?

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• Ping An Insurance has written off the majority of its investments in China Fortune Land in 1H21. However, the market continued to punish Ping An Insurance for its exposure to other real estate developers.

• We believe that the three developers Ping An Insurance is invested in have stronger balance sheets than China Fortune Land and Evergrande, giving them a better chance to tide through the real estate market slowdown.

• Ping An has also shared that its real estate exposure is only 4.8% of its insurance investment portfolio, translating to about RMB 186 billion out of its RMB 3.8 trillion investment portfolio. Furthermore, Ping An has disclosed that it is not holding any Evergrande’s equity or debt.

• We continue to hold a positive view of the Chinese insurance market as we still see plenty of room for growth in this space.

• For investors who can stomach and look past the short-term volatility, we believe Ping An Insurance is trading at attractive valuations. Not only it has the potential to double, but it is also offering an average dividend yield of about 6% in the next two years.

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: Ping An Insurance (HKEX:2318)