The Motley Fool

2 Solid Reasons Investors Should Like Ping An Insurance Group Now

Ping An Insurance Group Co of China Ltd (SEHK: 2318) is an insurance-turned-integrated financial services provider in China, providing insurance, banking, asset management, and internet finance products and services to close to 200 million retail customers.

In this article, I’ll look at two key reasons why investors might find the conglomerate an interesting candidate for further research.

Strong financial performance

Source: Ping An Insurance Group’s Investor Presentation

The above is a quick overview of Ping An’s first-half 2019 operating profit across the group.

Overall, the group delivered a solid first half in 2019, with group operating profit up by 23.8% on a year-on-year basis. What’s interesting to note here is that the main profit contributors – insurance and banking businesses – showed good growth as compared to the same period last year.

Moreover, Ping An proposed an interim cash dividend of RMB 0.75 per share, up 21.0% year-on-year. As of 30 June 2019, the Company had also repurchased RMB 3.40 billion (US$480 million) worth of A-shares.

All in all, a strong start for 2019!

Opportunity for more growth

From the above, we saw that Ping An delivered solid performance lately. Nevertheless, there are good reasons to believe that the company has room for further growth. Take a look at the chart below:

Source: Ping An Insurance Group’s Investor Presentation

The above charts tell us a number of important things.

For one, Ping An has significant untapped opportunities given its huge internet user base (of which 405 million are still not its financial customers). Secondly, the group has demonstrated a solid track record in cross-selling its products among its customers, evidenced by the improvement in the cross-selling penetration ratio over the last few years.

Putting both points together, investors can expect the group to continue to grow its business through 1) cross-selling products among its existing customers 2) converting internet users into customers.

Conclusion

In conclusion, investors should give Ping An a closer look given its execution track record, as well as great potential for future growth.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.