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China Pacific Insurance (Group) Co Ltd Class H 02601

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Morningstar’s Analysis

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CPIC’s Q3 Reported Resilient Profits in Non-Auto Insurance Business Despite Natural Disasters

Iris Tan, CFA Senior Equity Analyst

Analyst Note

| Iris Tan, CFA |

No-moat China Pacific Insurance’s, or CPIC's, third-quarter results were largely in line with our expectations. First-three-quarters net profit growth slowed to 15.5% year on year from 21.5% in the first half on deteriorating growth in net earned premium and investment return. These two revenue streams contracted 8% and 7% respectively in the third quarter from 4% and 23% growths in the first half. Third-quarter net profit merely dropped 0.5% year on year, which was better than the double-digit decline for most peers. This was attributable to a strong investment return at 5.3% and an 18% year-on-year decline in insurance liability reserve provisioning. The results are in line to deliver our projected 2021 net profit growth in the midteens; we retain our A-share and H-share fair value estimates of CNY 30 and HKD 36, respectively. The H-shares imply a historical low valuation level of 0.3 times 2021 price/embedded value. The stock is undervalued.

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Company Profile

Business Description

Established in 1988 with headquarters in Shanghai, China Pacific Insurance is a major provider of life and general insurance products and services. It is China's third- largest life insurer and third- largest general property and casualty insurer. The company strives for an integrated financial-services platform that consists of insurance, banking, and asset management.

1 South Zhongshan Road, Huangpu
Shanghai, 200010, China, People's Republic of
T +86 2158767282
Sector Financial Services
Industry Insurance - Life
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 110,940