The Motley Fool

3 Charts Showing Why I Buy Ping An Insurance Shares

Ping An Insurance Group Co of China Ltd (SEHK: 2318) is a well-known Chinese financial conglomerate with interests in insurance, banking, fintech and health tech, among others.

The company is well-positioned for long-term growth given the low insurance penetration rate in China and the company’s widespread use of technology.

I’d previously written why dividend investors will like their latest earnings. The company is also one I would be happy to continue buying every month. That’s because there is a lot more to like about it.

Here, I’ll share three charts that illustrate why Ping An Insurance is such a great long-term investment.

1. Massive online opportunity set

Ping An is a financial powerhouse that is utilising technology to continue growing its business and in order to take market share.

Positioning itself as an “online-first” business has only highlighted the importance of its strategy amid Covid-19.

As you can see below, at the end of 2019, Ping An had 200 million retail financial customers – 174 million of whom were Internet users.

However, the untapped opportunity for Ping An is in converting that massive 342 million Internet users in China who are not yet their customers.

Ping An online customers

Source: Ping An Insurance 2019 Annual Results presentation

2. Cross-sell capabilities

The beauty of Ping An Insurance is that it has a huge presence in a number of financial services markets. Using technology, it can easily cross-sell products across its various businesses.

What this enables are more “sticky” customers that are locked into the Ping An ecosystem at one point or another.

Furthermore, it also provides the group with more data on what customers want or need – allowing it to better target products for consumers.

As readers can see below, the increasing cross-penetration ratio (alongside the rising customer base) shows how good of a job Ping An is doing in executing this strategy.

Ping An cross-sell ratio

Source: Ping An Insurance 2019 Annual Results presentation

3. Range of businesses in different stages

Perhaps one of the less-appreciated aspects of Ping An Insurance is its exposure to its technology subsidiaries in various spaces.

As you can see in the company’s growth chart, its businesses are in different stages of development. However, with the support of Ping An Insurance’s massive customer base, these have been able to grow rapidly.

Even better, Ping An continues to experiment with technology in its own business to make things more efficient.

OneConnect Financial Tech Co Ltd (NYSE: OCFT) recently listed in the US while Ping An Healthcare and Technology Co Ltd (SEHK: 1833), also known as Ping An Good Doctor, has been listed in Hong Kong since 2018.

That the company can realise value in its investments by listing them is good news for shareholders, who can get exposure to these fast-growing businesses via Ping An Insurance.

Ping An tech businesses

Source: Ping An Insurance 2019 Annual Results presentation

Betting on the benefits of technology

For Ping An Insurance, the technology backdrop has been a strong driver of its investment thesis. As investors can see, the company has done an admirable job of carrying out this broader strategy.

If you believe in the long-term value of technology, like I do, then Ping An Insurance is definitely a stock to hold for the next 10-20 years.

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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 Tim Phillips owns shares in Ping An Insurance Group Co of China Ltd.