HTSC·2024-07-04 02:07Investment Rating - The investment rating for Ping An is "Buy" with a target price of RMB 70 (A shares) and HKD 69 (H shares) [7][11]. Core Views - The consolidation of Lufax into Ping An's financial statements is expected to have a minimal impact on Ping An's net assets. The earnings per share (EPS) forecasts for 2024, 2025, and 2026 are RMB 7.58, RMB 7.99, and RMB 8.24 respectively [2][4]. - The increase in Ping An's stake in Lufax from 41.40% to 56.82% enhances its control and may lead to closer collaboration between the two entities [2][3]. - Lufax's special dividend announcement led to a significant increase in its stock price, reflecting investor interest [3]. Summary by Sections Financial Performance - In Q1 2024, Ping An reported an EPS of RMB 2.07, a year-on-year decline of 4.6%, primarily due to weaker investment performance. However, the new business value (NBV) for life insurance grew robustly, increasing by 20.7% year-on-year, driven by improved profit margins [5]. - The combined ratio (COR) for property insurance reached 99.6% in Q1 2024, indicating a historically high level, influenced by credit guarantee insurance and natural disasters [5]. Valuation Methodology - The valuation of Ping An employs a three-stage DCF model, with the first three years providing clear forecasts, followed by a defensive period of ten years, and a long-term phase of thirty-seven years. The target price is based on the average of intrinsic value and book value methods [11][12]. Key Financial Metrics - Projected gross premium income for 2024 is RMB 585.81 billion, reflecting a 9.20% increase from 2023. Total investment income is expected to rise significantly to RMB 93.69 billion in 2024, marking a 181.16% increase from the previous year [6][17]. - The projected net profit for 2024 is RMB 132.29 billion, representing a 54.42% increase compared to 2023 [6][17].