China Life 2628; ADR (LFC)

[winston]

Not vested.

DJ MARKET TALK: Macq Cuts China Life To Neutral, Prefers Ping An

1031 [Dow Jones] STOCK CALL: Macquarie downgrades China Life Insurance to Neutral From Outperform. "We believe the benefits of robust equity markets are fully reflected in China Life's share price. At this juncture, we see no near-term catalyst to warrant chasing the stock at current levels."

Nudges up target price to HK$38.50 from HK$38.00 to reflect revisions to A-share equity market gain forecasts, results in raising 2009 earnings estimates by 11%; adds, company's net profit after tax least sensitive to market rise as only 2% of equity assets classified as trading. Tips better value elsewhere in sector, prefers Ping An (2318.HK), rated Outperform, target HK$91.00.

Says China Life's premium to Ping An unjustified as Ping An's new business growth equal to China Life's, with higher margin, stronger EV growth. China Life down 1.2% at HK$36.35; Ping An down 0.5% at HK$66.50.

Source: Dow Jones Newswire

[winston]

Not vested.

DJ MARKET TALK: China Life May Rise; Strong Dec Premium Income

0920 [Dow Jones] China Life (2628.HK) may rise after posting December premium income +39% on-year at CNY20.6 billion, bringing full-year premium income to CNY295 billion, down 0.2% on-year.

Credit Suisse says December represents strongest month of year in terms of premium growth, should be well received by investors. In 2010, CS thinks business mix enhancement will continue but extent of change expected to be much smaller than in 2009; also believes volume growth can surprise on upside;

"for the first time we can recall, China Life appears to be planning a more aggressive expansion in urban areas."


Keeps Outperform call, HK$46.00 target price. Stock down 0.3% at HK$36.70 yesterday.


Source: Dow Jones Newswire

[winston]

Not vested. From UOBKH:-

Valuation/Recommendation

Beneficiary of rising bond yields. Over the past two weeks, the PBOC has twice raised the yields for its one-year bills and raised the yield for its 3-month bills once. As over 50% of China Life’s investment portfolio is currently allocated to bonds, rising bond yields will have a positive impact on China Life’s new and reinvestment income.

( And what about the lossed on the existing bond portfolio ? )

Given the duration mismatch between assets and liabilities, with liabilities having longer durations, China Life also gains from mark-to-market adjustments.

( Good Risk Management implies no duration mismatch )

Maintain BUY on positive industry prospects. We believe the recent share price correction presents an opportunity to accumulate shares. The Chinese government is aiming to transform the economy into a consumption-driven model in the longer term. Life insurers in China will be a direct beneficiary of rising disposable income as increasing wealth will also propel the inclination to seek insurance coverage.

( Inclination to seel insurance coverage ? When has life insurance being bought and not sold ? )

Given China Life’s dominant rural presence as well as the potential for further strategic investments, we maintain our BUY and our target price of HK$44.00.

( And how's the claims from the rural areas ? )

[winston]

Not vested.

DJ MARKET TALK: China Life +3.8%; Preliminary FY Beats View-Citi

1455 [Dow Jones] China Life (2628.HK) +3.8% at HK$36.55, after news company has raised FY09 guidance, now expects FY09 net profit to more than triple vs FY08. Citigroup notes pre-announced FY09 net profit of over CNY30.2 billion is higher vs house's net profit forecast of CNY29.8 billion, based on HKFRS (HK financial reporting standards).

"This suggests that investor concerns over negative earnings/book value impact from accounting changes are probably overdone. After all, accounting changes do not impact fundamentals." Keeps at Hold, HK$43 target.


Source: Dow Jones Newswire

[winston]

Insurer net soars 71pc by Mandy Lo, The Standard HK:-
Thursday, April 08, 2010

China Life Insurance (2628) said net profit surged 71.8 percent to 32.88 billion yuan (HK$37.39 billion) last year from 2008 thanks to strong growth in investment yield.

The country's largest life insurer gained a net 21.24 billion yuan from securities investments. Its equity portfolio posted a gain of 17.9 billion yuan reversing a loss of 8.41 billion yuan in 2008. It also made 3.35 billion yuan from debt securities.

China Life reduced the proportion of bonds to 49.68 percent from 61.43 percent, and increased equity investments to 15.31 percent from 8.01 percent, said chairman Yang Chao.

Its investment assets reached 1.17 trillion yuan as of December 31, up 25 percent from a year earlier. A final dividend of 70 fen per share was declared.

Net premium edged up 3.7 percent to 275.1 billion yuan last year. Renewal premiums jumped 21.3 percent. But investment income fell 26.28 percent to 16.69 billion yuan mainly due to smaller dividends from investment funds and lower interest rates.

"The company will actively seize on investment opportunities by optimizing asset allocation and flexibly adjusting its investment strategies to enhance investment return," Yang said.

Last year the firm bought Bank of America's Hong Kong-listed shares in China Construction Bank (0939), and also invested in Sino-Ocean Land Holdings (3377) and the Bank of Hangzhou.

"With increased flexibility in macroeconomic control policies, the existence of inflation expectations and intensifying competition in the market, the company will continue to experience pressure in terms of business development and asset management," Yang said.

China Life shares rose 0.53 percent to HK$38.20.

http://www.thestandard.com.hk/news_deta ... 00408&fc=7

[winston]

Not vested. From Phillips:-

Risk

Market share reduces continually;

Domestic stock market subjects to large fluctuation in the near future, leads investment return to decrease, and affects the Company's profitability.


Valuation

In all, China Life's business remains stable and the profits increase continually.

We use our embedded value estimation, and give China Life's 12-month target price at HK$40.01, 15% higher than its last closing price, equivalent to 21.4x P/E and 2.8x P/EV in 2010 respectively.

Downgrade it to “Hold” rating.

[winston]

Not vested

DJ MARKET TALK: China Life Down 4.3%; MS Cuts Target To HK$39

1042 [Dow Jones] China Life (2628.HK) tumbles 4.3% to HK$31.30, worst-performing blue chip and most heavily traded HK stock, hurt by weaker-than-expected business performance in 1H, making stock vulnerable given still at premium valuation vs peers such as China Pacific Insurance (2601.HK).

Morgan Stanley cuts target price to HK$39 from HK$45, removes stock from Best Ideas list, although keeps Overweight call; says 1H10 results did show some fundamental trends that were below par, but "at this stage, we do not think the results are cause for alarm," as continues to see China Life as one of most profitable insurers globally.

House notes China Life's solvency margin weakened significantly in 1H, posing potential downside risk to dividend, while value of new business growth much below expectations.


Source: Dow Jones Newswire

[winston]

Not vested

China Life sank 6.3 percent to HK$30.65, the sharpest drop on the Hang Seng Index. The insurer said first-half profit rose 7.4 percent to 18 billion yuan ($2.65 billion) as premium income rebounded after a decline last year.

The earnings were “weak,” according to Citigroup Inc. China Life is the broker’s “least- preferred play” in the industry because of its “lackluster” operating trends and lack of property and casualty exposure, Citigroup said.

Source: Reuters

[winston]

Not vested. So are you investing into a Life Insurance Company or an Investment Trading company ?

DJ UPDATE: China Life Profit Down 22% At CNY7.97 Bln

HONG KONG (Dow Jones)--China Life Insurance Co. (LFC) said Monday its first quarter net profit fell 22% from a year earlier, dragged by lower investment income.

China's largest life insurer by premiums said its net profit for the three months ended March 31 was CNY7.97 billion ($1.22 billion), down from CNY10.21 billion a year earlier.

Its premium income and policy fees totaled CNY122 billion in the first quarter, up 11% from CNY110 billion a year earlier. China Life, which has a roughly 40% share of the country's life insurance market, has said it aims to increase its premiums by more than 10% this year.

China Life said its first-quarter investment income declined 6.4% from a year earlier to CNY17.17 billion.

China Life Vice President Liu Jiade said in March that the insurer will continue to focus on fixed-income investment this year amid a rate-hike cycle. He said fixed-income products will continue to account for around 78% of its investment portfolio in 2011, roughly the same as in 2010.

Higher interest rates will improve insurers' income from fixed-income products such as bank deposits and bond investments, said analysts, adding they expect China Life's net profit to grow 10%-15% this year.

China's central bank has raised the benchmark interest rates three times since October, and analysts widely expect there will be more such hikes in the coming months as the government is grappling with inflation.

China Life's rival Ping An Insurance (Group) Co. of China Ltd. (2318.HK) will announce its first-quarter earnings on Wednesday.

Source: Amy Li, Dow Jones Newswires

[winston]

Not vested. From Phillips:-

Risk

Market share reduces continually due to the slow-down of the growth of premiums;

Domestic stock market subjects to large volatility in the near future, leads investment returns to decrease.


Valuation

In all, China Life's performance was worse than our expectation and the profit growth has slowed down.

We use the average price between our embedded value estimation and sum-part method, and reduce China Life's 12-month target price to HK$34.70, around 30% higher than its last closing price, equivalent to 20.4xP/E, 3.3xP/B and 2.2xP/EV in 2012 respectively. Upgrade it to “Buy” rating.