Divergence between value and price: When will insurance stocks "turn over"? Release time: 2014-05-0809:09:20 Author: Li Zhongxian, China Insurance News Data Center Source: China Insurance News·China Insurance Network ■In the first quarter of this year, four A-share companies were listed
The premium income of insurance companies all maintained double-digit growth. Except for China Life, the other three companies also saw varying degrees of growth in net profits.
Despite the stellar performance, insurance stock valuations are still at historically low levels ■The fundamentals of the four insurance companies are developing in a good direction, and insurance stocks have a certain "margin of safety" ■Valuation restoration of insurance stocks is expected to begin in the second half of the year
, the rollout of the preferred stock pilot program and the launch of Shanghai-Hong Kong Stock Connect may become boosters. As the first-quarter reports of the four listed A-share insurance companies have been released, the first-quarter report cards of the four insurance companies have also been announced.
Data shows that the premium income of the four listed insurance companies has maintained double-digit growth, but their profit performance has diverged.
Ping An of China and China Pacific Insurance, which have life and property insurance businesses, saw net profits in the first quarter increase by 46.2% and 44.3% respectively year-on-year. The other two insurance companies were not satisfactory. New China Insurance's net profit increased slightly by 6.5%, while China Life's net profit fell by 28.3% year-on-year (
As shown in Table 1).
Table 1. Operating conditions of the four major A-share listed insurance companies in the first quarter of 2014. Insurance stocks are undervalued, and Ping An is severely undervalued. Faced with this report card of listed insurance companies, investors do not give face.
As of April 30, the insurance stock index underperformed the Shanghai Composite Index and the Shanghai and Shenzhen 300 Index (the points on Figure 1 describe the investment return rate of investing a certain amount at the beginning of this year and holding it to that point in time).
Since the beginning of this year, China Life, Ping An of China, China Pacific Insurance and New China Insurance have fallen by 10.8%, 6.5%, 13.3% and 12.4% respectively.
In recent years, the development momentum of my country's insurance industry has slowed down, and insurance stocks have also fallen along with it.
In 2013, the insurance industry began to show signs of recovery.
The annual report shows that the four major listed insurance companies *** achieved a net profit of 66.602 billion yuan in 2013, an increase of 70.2% over the previous year.
Ping An of China had the lowest growth rate of 40.4%, and China Life Insurance had the highest growth rate of 123.9%.
However, the outstanding performance was not reflected in the barometer of the stock market. In 2013, the stock prices of China Life, Ping An, China Pacific Insurance and New China Insurance fell by 30.44%, 8.69%, 17.64% and 20.61% respectively.
There is a certain value divergence in insurance stocks.
In the first quarter of this year, with the exception of China Life, the net profits of the other three insurance companies have increased at different levels, while insurance stocks are still showing a downward trend, and the degree of deviation between value and price continues to expand.
In particular, Ping An of China and China Pacific Insurance, which have strong profitability, have the greatest deviation between their value and stock price.
Even for China Life, whose net profit has declined, we believe that its stock price is undervalued to a certain extent. The decline in its net profit is mainly affected by the decline in total investment yield and the high scale of liability reserve provisions. The company's other profits
All indicators performed well.
From P/EV (price to embedded value ratio), we can see the valuation degree of a company's stock. EV is the embedded value of an insurance company, which is similar to the net assets of other companies and is the liquidation value of an insurance company. Using EV
From the perspective of insurance companies’ policies being valuable (without net assets), the valuation of insurance stocks has continued to decline in recent years, and is at the lowest level compared with the industry’s historical valuation data.
The P/EV values ??of the four listed insurance companies have all fallen below 1 times or close to 1 times (as shown in Figures 2, 3, 4, and 5).
From the perspective of price-to-earnings ratios, the price-to-earnings ratios of the four listed insurance companies are all within a reasonable range of 10 times to 20 times.
As of April 30, China Life was 15.53 times, Ping An was 10.99 times, China Pacific Insurance was 15.99 times, and New China Insurance was 14.06 times.
Among them, Ping An has the lowest price-to-earnings ratio and is the most undervalued.
Judging from the list of shareholders disclosed in the first quarter report of this year, the top 10 largest circulating shareholders of the four listed insurance companies have rarely seen traces of public funds. They are mainly state-owned enterprises or overseas investors. There are even domestic among the top 10 largest circulating shareholders of China Life.
Natural person investors.
Comparing the shareholder list in recent years, you will find that the top ten shareholders are stable, have concentrated shareholdings, and show a trend of long-term investment.
If the top 10 largest shareholders hold listed companies for a long time in the future, the real circulating market value of these insurance companies will actually not be large.
Among them, the top ten shareholders of China Life account for 93.6% of the circulating capital of A shares, and the market value of the remaining A shares is only 18.2 billion; the top ten shareholders of China Ping An account for 27.4% of the circulating capital of A shares, and the remaining
The market value of A shares is 136 billion, ranking first among the four insurance companies; the top ten shareholders of China Pacific Insurance account for 64.9% of the circulating capital of A shares, and the market value of the remaining A shares is 36 billion; the top ten shareholders of Xinhua Insurance
The shareholding ratio accounts for 82.1% of the circulating capital of A shares, and the market value of the remaining A shares is only 7.5 billion.
The fundamentals are good, and the intrinsic value of insurance stocks continues to rise. The law of value tells us that the value of a commodity determines the price, and the price fluctuates around the value.
When the price deviates seriously from the value, the valuation will be restored again.