Soochow Securities·2024-07-16 10:00Investment Rating - The investment rating for Ping An Insurance (601318) is "Buy" (maintained) [1] Core Views - The issuance of H-share convertible bonds is expected to have a limited dilution impact, and the increased dividend capacity can offset negative effects [1][4] - The company plans to use the net proceeds from the convertible bond issuance to support its future financial core business development needs and to enhance its capital requirements [3][4] - The issuance is also aimed at supporting the company's new strategies in healthcare and elderly care [3] Financial Projections and Valuation - The forecasted net profit attributable to shareholders for 2024-2026 is projected to be CNY 120.38 billion, CNY 154.12 billion, and CNY 162.21 billion, with year-on-year growth rates of 40.5%, 28.0%, and 5.2% respectively [2][4] - The company's embedded value per share is expected to increase from CNY 76.34 in 2023 to CNY 83.19 in 2024 [2] - The P/EV ratio is projected to be 0.55 in 2024, indicating a favorable valuation [2] Convertible Bond Details - The convertible bond issuance is set at USD 3.5 billion, with a coupon rate of 0.875% and a maturity date of July 22, 2029 [3][9] - The conversion price is set at HKD 43.71, representing a premium of approximately 21.2% over the closing price on the announcement date [3][9] - If fully converted, the bonds would result in approximately 625 million new shares, accounting for about 8.39% of the existing H-share capital [4][9] Capital Adequacy Impact - The issuance is expected to enhance the comprehensive solvency ratio by 3.1 percentage points, increasing it from 208.03% to 211.1% [4][9] - The solvency ratios for various segments of the company remain stable and above regulatory requirements [4] Market Data - The closing price of Ping An Insurance is CNY 42.53, with a market capitalization of CNY 774.48 billion [6][7] - The price-to-book ratio is 0.86, indicating a potential undervaluation [6]