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    The financial technology giant is working hard again! Ping An’s net profit has entered the “100 billion club”

    2019-03-13 10:54:55

    Financial sector website 

    On the evening of March 12,Ping AnThe release of the 2018 annual report, the net profit exceeded 100 billion yuan for the first time, a number of financial indicators far exceed market expectations, once again brought unexpected surprises to investors.

    According to the annual report, Ping An achieved an operating profit of 112.537 billion yuan attributable to shareholders of the parent company in 2018, a year-on-year increase of 18.9%; net profit attributable to shareholders of the parent company was 107.404 billion yuan, a year-on-year increase of 20.6%. This is the first time in the history of China’s Ping An that the net profit has exceeded 100 billion yuan. At the same time, the operating ROE reached 21.9%; customer operating performance continued to grow, personal business operating profit reached 97.729 billion yuan, an increase of 31.1%, accounting for 86.8% of the Group's operating profit attributable to shareholders of the parent company; life insurance and health insurance business realized operating profit 71.345 billion yuan, an increase of 35.1%, ROEV up to 30.8%.

    In the context of industry restructuring, the company continued to optimize its business structure. The value of new business reached 72.294 billion yuan, a year-on-year increase of 7.3%. The value of new business in the second half of the year increased by 16.9% year-on-year; the financial technology and medical technology business were attributed to shareholders of the parent company. The operating profit was 6.77 billion yuan, accounting for 6.0% of the group's operating profit.

    China Ping An's 2018 annual results far exceed market expectations, which undoubtedly gives investors in the secondary market more confidence. It should be noted that the above performance is achieved under the premise that the overall macro environment and industry environment are not ideal in 2018, which highlights the outstanding core competitiveness of Ping An.

    At the same time, Ping An also issued an announcement on the repurchase of the company's A-share plan. It is proposed to use its own funds of not less than 5 billion yuan and not more than 10 billion yuan to repurchase A shares at a repurchase price of no more than 101.24 yuan / share. This will further stimulate investors' determination to actively bullish the company's stock price.

    Elephants rushing: core indicators achieve high growth

    Most investors do not fully understand the insurance industry, nor do they understand how to read the performance data of insurance companies. What indicators should an insurance company look at? NBV and its growth rate, operating profit, and residual margin are key.

    (1) NBV growth rate is unique

    NBV (New Business Value), the discounted value of future profit for a new single-year premium, is the incremental business value of the most recent year, and its growth rate reflects the true value and growth of the business. In 2018, China Ping An Life Insurance and Health Insurance NBV reached 72.294 billion yuan, a year-on-year increase of 7.3%, a new high, and the compound growth rate in the last five years was as high as 26.9%.

    In the context of industry restructuring, Ping An took the lead in realizing NBV from negative to positive in the second quarter of 2018, far exceeding market expectations and leading the industry. In the third quarter, the single-season NBV grew by 10.9% year-on-year. In the fourth quarter, NBV achieved a growth rate of 23.9% again. The growth rate continued to be optimized, significantly better than the peers, and the quarterly improvement trend was established. China's Ping An NBV growth rate is unique, and the growth rate in two consecutive quarters has returned to double digits, which is far higher than its peers.

    In the first three quarters, NBV Margin (new business value ratio) increased by 4.4 percentage points year-on-year to 43.7%, a record high since 2017. Among them, the agent business new business value rate was 57.1%, up 7.2 percentage points year-on-year. The increase in the new business value rate stems from three aspects:

    1) The agent channel team achieved a qualitative increase, and promoted the steady growth of the annual large-scale premiums. The number of Ping An life insurance agents reached 1.4174 million, an increase of 2.3% from the beginning of the year. In the context of the emergence of manpower shedding in major companies in the industry, the company has continued to increase its membership, fully reflecting the Group's comprehensive financial advantages; the banking insurance channel business structure has been continuously optimized; the market share of the sales channels has remained high, and the Internet product system has been further improved.

    2) Focus on long-term protection products with high business value, relying on the “product+” strategy, increase the development of supportive products, continuously optimize product services, enrich service scenarios, and focus on promoting “safeship” and “love full marks”. Insurance sales.

    3) Science and technology to help finance, through the "technology +" strategy, continue to improve sales support and customer service and other capabilities, focus on addressing the pain points of increase in staff, training, team management, sales, etc., to help business development.

    The Group's unique comprehensive financial advantages shape the advantages of agents, which in turn promotes new single premiums and NBVs to continue to outperform peers, benefiting the development opportunities of the life insurance industry. The new business value reflects Ping An's sustainable operation ability and growth potential, and will gradually transform into intrinsic value in the future, becoming the main driving force for performance growth.

    (2) High operating profit growth, obvious upward trend

    Why is operating profit more worthy of attention than net profit? On the basis of net profit, operating profit is excluded from short-term investment fluctuations, changes in discount rate and one-off major project adjustments, reflecting the stable amortization of insurance deposits, better reflecting the company's operating performance and trends, and more accurately Forecasting future performance is more informative.

    In 2018, the Group's operating profit attributable to shareholders of the parent company was 112.573 billion yuan, a year-on-year increase of 18.9%. It was also the first time to break through the 100 billion yuan mark. The life insurance and health insurance business was attributable to the operating profit of the shareholders of the parent company of 71.345 billion yuan, a year-on-year increase of 35.1%. The rapid growth of operating profit more intuitively reflects that China Ping An's performance is in a stable upward trend, which can fully guarantee the stability of the company's overall performance.

    The core indicator of life insurance NBV achieved double-digit high growth for two consecutive quarters, NBV Margin hit a record high in the quarter, and operating profit exceeded 100 billion for the first time. All this data proves that Ping An’s core profit indicators are very strong, highlighting the industry’s leading position. Quality has both the dual attributes of faucet and growth.

    (3) Residual marginal steady growth

    Net assets investment income, spread income, residual marginal amortization, operating deviations and others are the main sources of operating profit. The remaining marginal amortization contributed about 70% of the operating profit of China Ping An's life insurance and health insurance business.

    What is the residual margin? Based on the commercial property of insurance, for an insurance contract, when the contract is initially confirmed, the gain is not immediately recognized, but the liability item that enters the balance sheet as a liability item is the liability of the insurance company to the insured, and the profit of the insurance contract. With the implementation of the contract gradually released into the company's profits. Therefore, the remaining marginal balance is essentially a future profit, which is included in the profit through the residual marginal amortization, which means that the residual marginal amortization is the source of future profits.

    In 2018, the remaining marginal balance of Ping An Life Insurance was 786.63 billion, an increase of 27.6% compared with the beginning of the year. The main reason was that the new business continued to increase the remaining marginal balance, and the new business contributed 177.485 billion yuan, accounting for 22.6% of the total balance. The remaining marginal amortization in 2018 was 62.287 billion, a year-on-year increase of 25%, accounting for 55% of the company's operating profit, which is the core source of the company's profits. The scale of the remaining marginal balance is getting bigger and bigger, the company's future profits will be more controllable and stable release, ensuring long-term stable growth of the company.

    Technology + Finance: Putting the wings of technology into finance

    An easy-to-understand example: a car that reaches 120KM/hour is easy, but it's rare to see large trucks or buses running so fast. But why can high-speed rails fly at a speed of more than 300KM/hour? The key lies in the word "technology". In order for an elephant to want to run for a long time and in a stable manner, it must be supported by technology. Ping An, an elephant like a high-speed rail dragon, is driven by the dual-wheel drive of “financial + technology” to insert the wings of technology into finance to achieve such high-speed growth.

    (1) The financial technology sector continues to exert strength and hit a new high

    While the company's financial business continued to grow at a high level, China Ping An's financial technology sector achieved a leap-forward development. The financial technology and medical technology business achieved an operating profit of 7.748 billion yuan, which was attributable to the Group's parent company's operating profit of 6.77 billion yuan, a year-on-year increase of 23%, accounting for 6.0% of the group's operating profit, accounting for a gradual increase. In the future, the proportion of the financial technology sector in the Group's business is expected to grow exponentially.

    At present, Ping An Group has realized two major areas of financial technology and medical technology, with a three-dimensional layout supported by five major sub-blocks.

    Lujin Holdings has pioneered and innovated in the fields of wealth management, personal borrowing and government finance, and has maintained compliance and continued to grow its profits. Lujin Holdings completed the C round of financing, the financing introduced a number of internationally renowned investment institutions, the post-investment valuation reached 39.4 billion US dollars.

    Ping An Good Doctor (1833.HK) is listed on the main board of the Hong Kong Stock Exchange. The total market value has so far exceeded HK$50 billion. Ping An Good Doctor provides online and next-line medical health management services for over 265 million registered users. The annual operating income was 3.338 billion yuan, a year-on-year increase of 78.7%.

    As a financial industry-wide technology and technology service platform, Financial Accounts has served more than 3,000 financial institutions and completed Series A financing in 2018, with a post-investment valuation of US$7.5 billion.

    Ping An Healthcare Technology completed $1.15 billion in financing in early 2018, with a post-investment valuation of $8.8 billion.

    The total market value of the car home is more than 10 billion US dollars. In 2018, the operating income is 7.23 billion yuan, and the online marketing business accounted for 11.8%. In December 2018, the average daily user visits of the mobile home mobile home reached 29 million, an increase of about 29 million. 10% further consolidates the leading position of the car home in domestic automotive mobile applications.

    (2) The synergy effect of technology and finance

    The technology and finance of Ping An Group are not isolated from the two major sectors, but are mutually supportive, which can produce great synergies.

    On the one hand, the growth dividends of the technology sectors such as Lujin, Good Doctor, Credit Book, and Medical Insurance Technology will continue to spill over into the company's insurance, banking, asset management and other financial businesses, forming a “radiation effect”. Through financial technology innovation, it is possible to reduce costs and improve efficiency within the Group, and continuously enhance the competitiveness of traditional financial services, and ultimately realize value transformation.

    On the other hand, corporate insurance, banking and other financial services, with its strong resources, can bring higher traffic and high net worth to the technology business, and realize the realization of traffic.

    For example, through the use of technology, the barriers to information flow between different types of insurance and between different channels have been opened up, and the degree of cross-infiltration of customers has been continuously improved, and the value of customers has been simultaneously improved. According to the data of the mid-year report, the cross-selling of insurance business continued to maintain significant growth. In 2018, through the agent channel, the new premium income of Ping An Property Insurance, Ping An Annuity and Ping An Health Insurance was 51.453 billion yuan, a year-on-year increase of 18.8%.

    More importantly, Ping An Group is based on the “Personal Financial Life Service” and exports the five major ecological circles of “financial services, medical health, automobile services, real estate services and smart cities” through the technology platform to form a personal financial life service value chain. Imagine that with the popularity of smartphones and the coming of the 5G era, Ping An can provide everything we need from banking, insurance, wealth management to healthcare, real estate, automotive services, and smart city life. Means and tools are so convenient. It can be said that Ping An Group's "financial + technology" and "financial + ecological" strategies are to deeply explore the financial needs of customers, provide all possible facilitation services for people's lives, and truly realize "safety is by your side." This will inevitably promote the overall technological level of the industry, and will further consolidate the leading position of Ping An's financial technology industry.

    (3) Financial technology giants set sail

    The core measure of a company's technological strength is the number of patents. As of December 31, 2018, the number of applications for Ping An Science and Technology in China increased by 9021 compared with the beginning of the year, reaching a total of 12,051, ranking among the top international financial institutions, with a total of 3,397 PCT and overseas patent applications. Patents cover cutting-edge technologies such as artificial intelligence, cloud computing, biometrics, and blockchain.

    The investment in technology will inevitably bring joyful returns. The accuracy of the safe face recognition technology is 99.8%, the accuracy of the voiceprint recognition text is 99.7%, and the micro-expression recognition technology is accurate to 95.8%. It ranks first in the OMG international micro-expression evaluation, reaching the world's leading level. In December 2018, in SQuAD, a machine reading comprehension competition initiated by Stanford University, GammaLa, a financial account of China Ping An, successfully surpassed Google, Microsoft Research Institute, and Aridama Academy with its leading machine reading comprehension technology.Keda NewsThe top competitors ranked first in the list, the accuracy of accurate matching can reach 83.435%, and the accuracy of fuzzy matching can reach 85.992%.

    Therefore, Ping An is not only a leading financial enterprise, but also a technology giant with core technology. The speed of its growth has amazed the world.

    The future: trillion market value may be just the starting point

    As of the close of the 12th, China Ping An’s total market value was 1,265.9 billion yuan, ranking 5th in the total A-share market capitalization. However, for China Ping An, the trillion market value may be just the starting point.

    Review the research report of major brokers and summarize the target market value of some brokers and their target price. The agency predicts that Ping An’s average target market value will reach 1.5 trillion in the next 3-6 months, corresponding to the A-share target price of 82 yuan. If the company’s 2018 annual results exceed expectations, the seller’s organization is expected to continue to increase Ping An’s Target price.

    Technology has inserted the wings of finance into finance, changing not only the business model and operational efficiency of Ping An, but also the valuation system changes brought to the research institutions and investors in the secondary market. Obviously, the valuation of the traditional financial industry is used. The system does not fully reflect the value of Ping An. The main change comes from the technology sector. Ping An has a strong core competitiveness in the technology sector, and the ultra-high growth of the technology sector makes the profit brought to the group in the short term far below its actual value.

    At present, Ping An’s “financial + technology” strategy has already begun to take effect. It has begun to exert its efforts in life insurance, property insurance, wealth management and other businesses, gradually realizing the realization of traffic and technology output. Exporting innovative technologies and services to accelerate the transformation of scientific and technological achievements, Ping An uses the power of science and technology to change the traditional financial industry, strengthen core technology research and control of independent intellectual property rights, and has grown into a global technology giant, and is still a fast-growing giant. .

    In 2018, it was the 30th year of the establishment of Ping An. As the saying goes, "Thirty is standing," peace is still very young. We look forward to better peace and support better peace.

    Hot searchPing An

    Editor in charge: Guo Zongming RF13236

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