China Life 2628; ADR (LFC)

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7 A-Rated Financial Stocks to Buy Now: China Life Insurance Company Ltd. (ADR) (LFC)
Sector: Insurance
YTD Performance: +28.3%

Here’s the great thing about the insurance sector — insurance companies are essentially big banks that make their money off of their investment portfolios.

Since some of this money has to be liquid in case they have to pay out on a catastrophic event, a good chunk is kept in cash or Treasuries.

As the dollar declines, rates rise and insurance companies make more money on their piles of cash. With the Federal Reserve vowing to raise rates this year, again, it’s bullish for insurance firms.

China Life Insurance Company Ltd (NYSE:LFC) has another great growth kicker — it sells life insurance in China. Already 177 million members strong, LFC is a great play on the rising middle class in China.

LFC sells not only individual policies but group life and supplemental medical insurance. As corporations begin to offer benefits to employee pay packages, LFC stands to benefit mightily.

LFC’s stock is up nearly 90% in the past 12 months.

Source: Investor Place

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CHINA LIFE (02628.HK) 3Q Net Profit Tumbles 74.33% to RMB2.35B

CHINA LIFE (02628.HK) -0.450 (-1.461%) Short selling $104.24M; Ratio 10.633% announced its third quarter results as of the end of September prepared in accordance with the China Accounting Standards for Business Enterprises.

During the period, its net profit tumbled 74.33% yearly to RMB2.348 billion, with EPS of RMB0.09.

Its turnover dropped 12.95% yearly to RMB90.596 billion.

In particular, its investment income was RMB18.226 billion, down 37.12% yearly. Its insurance income amounted to RMB76.162 billion, up 2.77% yearly.

For the first three quarters of this year, its net profit rose 22.81% yearly to RMB33.837 billion, with EPS of RMB1.2. During the period, its turnover rose 21.91% yearly to RMB424.007 billion.

Source: AAStocks Financial News

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<Research Report>Citi: CHINA LIFE Weak 3Q Earnings Likely One-Off; 2015 Earnings Estimates Cut 9%

CHINA LIFE (02628.HK) delivered weak 3Q results. Net profit tumbled 74%, mainly due to hefty MTM loss.

Since the results are noticeably behind the estimates of Citigroup, FY15 profit forecast was cut by 9%.

The research house maintained the rating at Buy, with a target price of $46.

For the third quarter, net profit totaled RMB2.348 billion, which accounts for 17% of Citigroup's 2H15 estimates and 16% of forecast of other brokers.

Investment income fell 79% due to the collapse of A share.

Premium growth was 3% YoY, together with a 3% rise in operation expenses.

Source: AAStocks Financial News

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CHINA LIFE (02628.HK) Expects Annual Net Profit to Grow About 5-10%

CHINA LIFE (02628.HK) +0.620 (+3.414%) Short selling $96.18M; Ratio 7.394% issued a positive profit alert, expecting the net profit attributable to equity holders of the company for the year 2015 may increase by approximately 5-10% as compared to that for the same period of 2014, mainly due to factors such as the increase in investment income.

However, update of actuarial assumptions, such as change of discount rate assumption of reserves of traditional insurance contracts, partially reduced the profit for the period.

Source: AAStocks Financial News

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<Research Report>Citi: CHINA LIFE 4Q15 Results Disappointing

CHINA LIFE (02628.HK) just pre-announced that its 2015 profit will record a growth of 5-10%, as compared with the corresponding period of last year.

This signifies that the insurer posted a net loss of RMB15 million to net profit of RMB1.595 billion in 4Q15, far below the estimates of Citigroup and market consensus. The research house expected CHINA LIFE would likely be marginally profitable in 4Q15.

It is believed that the miss was mainly due to weak investment performance and decline in the discount rate for the reserves of traditional products (non-profit-sharing).

While the promotional guaranteed-return products only account for less than 10% of total full-year premiums, the broker believes earnings sensitivity to reserve discount rate would be amplified.

Citigroup also noted that CPIC (02601.HK) delivered stronger 4Q15 earnings than CHINA LIFE. In addition, PING AN (02318.HK) will deliver steadier earnings trend than CHINA LIFE.

Source: AAStocks Financial News

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China Life Insurance Sinks On $3.6 Billion Guangfa Bank Buy

By Shuli Ren

China Life (2628.Hong Kong) tumbled 4% today after agreeing to buy another 24% of China Guangfa Bank for 23.3 billion yuan.

China Life is attracted to Guangfa Bank’s “stronger differentiating competitive edge in retail, small and micro businesses.”

With 44% stake, China Life is now Guangfa’s largest shareholder, followed by State Grid and Citic Trust’s 20% each.

However, China Life is not getting a good deal. It is buying Guangfa at 6.39 yuan per share, implying 1.01 times 2015 book. This is the lowest price China Life can get, because Beijing has regulated that Chinese banks can’t be sold at below their book value.

But banks are much cheaper on the market place, trading at only 0.6 times book. Insurance companies, by comparison, trades at 1.3 times.

Overnight, Citigroup (C), which sold a 20% stake of Guangfa to China Life, fell 1.7%.

Source: Barron's Asia

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Daiwa: China Life Reiterated at Outperform; Target Cut to $18

Daiwa believed that the valuation of CHINA LIFE (02628.HK) -0.120 (-0.709%) Short selling $289.83M; Ratio 12.495% as an insurance company to be dragged down by the China Guangfa Bank acquisition.

At an earlier time, CHINA LIFE decided to buy the stakes from Citigroup.

Chinese banks justify a much lower P/B compared with China insurers due to banks’ fundamental challenges, such as the deterioration of asset quality and NIM pressure, and their low book transparency.

The deal is being done at almost the lowest price possible. The acquisition price implies about a 1.01x 2015 P/B, barely above the 1.0x minimum trailing P/B allowed. Thus, it can be seen as the removal of an overhang.

The broker cut CHINA LIFE's target price from $22 to $18. The rating was Outperform. Among the insurers, CPIC (02601.HK) -0.050 (-0.199%) Short selling $17.99M; Ratio 10.217% is Daiwa's preferred pick.

Source: AAStocks Financial News

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Stock rally benefits insurer

China Life Insurance (2628), the nation's largest insurer, said profit rose 7.7 percent last year as investment returns benefited from a rally in the nation's stock markets in the first half.

Net income climbed to 34.7 billion yuan (HK$41.3 billion), or 1.22 yuan a share, from 32.2 billion yuan, or 1.14 yuan a share.

The Beijing-based insurer has spent about 36 billion yuan since December buying stakes in banks, diversifying its profit mix to limit the impact of China's volatile financial markets.

The business took a hit in the final three months of 2015 with fourth-quarter profit slumping 81.5 percent in the period from a year earlier.

China Life shares fell 0.9 percent to HK$19.32.

Source: The Standard

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Insurer tips first-quarter net profit plunge

China Life Insurance (2628) yesterday forecast a 55 to 60 percent tumble in its first-quarter net profit compared with the same period a year earlier due to a drop in investment income.

A change of discount rate assumption of reserves of traditional insurance contracts also caused the estimated profit drop, Asia Pacific's biggest insurer by market value said in a regulatory filing.

China Life's net profit was 12.27 billion yuan (HK$14.7 billion) for the first quarter of 2015.

The mainland's weakening economic growth and falling interest rates are challenging life insurers' profitability. As traditional investment returns fall, some insurers aggressively increase their exposures to equities and alternative investments to boost income, which further builds up investment risks.

In March, Moody's changed its outlook for the Chinese life insurance industry to negative from stable, citing China's lower interest rates as "the key threat" for insurers' credit profiles.

"Lower rates mean that the insurers which derived 60 percent to 80 percent of their 2014 investment income from interest income from deposits and fixed income securities will see a significant drop in investment yields," it said.

China Life is scheduled to release its full first-quarter report on April 28.

The stock fell 1.8 percent yesterday to HK$19.24.

Source: AGENCIES

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Market ills drag China Life net down 67pc

by Carrie Chen

China's largest insurer China Life (2628) saw interim net profit slump 67 percent to 10.4 billion yuan (HK$12.1 billion) due mainly to lower investment income dragged by stock-market declines and falling interest rates.

Gross investment income fall 49 percent to 50.8 billion yuan, compared to a 99.9 billion yuan in the same period last year.

Net premiums grow 23.9 percent to 284.2 billion yuan in the first half of this year. New business value, which gauges the profitability of new life policies sold, reached 28 billion yuan, up 50.4 percent.

Core capital rose 4.6 percent to 662.9 billion yuan, but core solvency ratio dropped 25.78 percentage points to 298.32 percent as higher minimum capital was required for the growth of the company's business.

Basic earnings per share was 36 fen while embedded value of the company grow 4.2 percent to 583.8 billion yuan. No interim dividend was declared.

In other news, CIRC released an exposure draft on Wednesday aiming to limit the upper range of the high-priced guaranteed yield of insurance products for the first time.

Investment bank China International Capital Corporation said the new policy will result in universal life insurance, worth 600 billion yuan, to withdraw from the A-share market in five years.

China Insurance Regulatory Commission reject the analysis, the move will further strengthen the assurance ability of life insurance products.

Source: The Standard