Fri Oct 23, 2020 18:59
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PING AN (2318)

Principal Activities

The principal activities comprise the provision of a wide range of financial products and services with a focus on the businesses of insurance, banking, asset management, fintech and healthtech.

Latest Results

The Group's profit attributable to shareholders for the 6 months ended 30-06-2020 amounted to RMB 68.68 billion, a decrease of 29.7% compared with previous corresponding period. Basic earnings per share was RMB 3.8841. An interim dividend of RMB 0.8 per share was declared. Net earned premium amounted to RMB 415.75 billion, a decrease of 1.3% over the same period last year. (Announcement Date: 27 Aug 2020)

Business Review - For the six months ended June 30, 2020

So far 2020 has been challenging, having witnessed a complex fast-changing macro-environment, the dramatic impact of COVID-19, and highly volatile global markets. History shows that turbulence leads to great change and crisis breeds opportunities. At Ping An, 2020 is a year of reform for its life insurance business amid huge internal and external challenges. In this interim report, we are providing details of our reform progress in answer to the concerns of investors.

In pursuing reform and innovation, it is critical to remain true to our original aspirations. As the saying goes, “you reap what you sow.” By holding true to our original aspirations we will accomplish our mission. We have made tremendous progress in realizing these aspirations. As one of the trailblazers in China’s insurance industry, Ping An is breaking through old market conventions to provide customers with diverse insurance products and integrated financial services. Ping An serves the real economy and people’s livelihoods with cutting-edge technologies and products to protect the safety of thousands of families and make life easier. Seizing the strategic opportunity brought by a once-in-acentury change, Ping An strives to become a role model for Chinese financial companies and a benchmark for technology innovators, in doing so making contributions to national rejuvenation.

With challenges come opportunities, and now is the time for reform. Since its inception in 1994, our life insurance business has been growing strongly, benefiting from the favorable times, regulatory policies, and solid foundations laid in our early days. In recent years, however, we have identified huge challenges threatening the healthy, sustainable development of the traditional life insurance business model; we have entered a new era of market development. The evolving macro-environment, consumer demands and demographic dividends as well as advancing technology applications have all raised new and higher requirements for the life insurance industry. To create something new, one must reform the obsolete. We urgently need to adjust and upgrade our internal management, product design, and channel development practices. We must carry out an all-encompassing reform for our life insurance business. We spent two to three years developing a reform strategy, and found a way to shift gears in the life insurance business. Now is the time for us to make changes, lay a solid foundation for future growth, and build platforms for sustainable high-quality development.

To accomplish our mission, we must remain true to our original aspirations. We had to clearly identify the problems before launching our reform. In following our original aspirations, to “meet customer demands” and “make life easier with expertise,” we have identified four reform directions, namely teams, products, management, and culture. First, we will reform our sales teams because the mixed competencies of our sales agents call for better management and training. Second, we will reform our products by improving the “products + services” framework and empowering sales and operations through the “products + technologies” strategy. Third, we will reform our management to be more visionary in long-term planning and more patient with intensive cultivation. Fourth, we will reform our culture by prioritizing quality, aiming high, remaining alert to crises, and embracing technologies.

With clear aims, the reform will become one of our major corporate development milestones. I am the head of a task force dedicated to steering Ping An Life’s reform. We aim to become not only the largest life insurer, but also a market leader, an industry benchmark, the customers’ first choice, and a world-leading life insurer. The world’s centuries-old traditional life insurance business model is undergoing comprehensive change. By advancing reform, Ping An is leading a revolution in the centuries-old approaches to the sales and operations of the life insurance sector.

The reform cannot be finished overnight. At the heart of Ping An Life’s efforts to build platforms for long-term sustainable growth are digital operations established under a “channel + product” strategy. The challenges facing life insurers have raised wide concern in the industry. Traditional insurers and internet insurance players are all stepping up their own reforms. Some drive growth by expanding their sales forces; some pursue higher productivity and better performance; and some take advantage of the internet, technologies, and innovative models. We plan to build platforms for long-term sustainable, healthy growth through product strategies, channel development and data-driven operations, providing customers with responsive, convenient, reliable and intuitive financial services.

We take a customer-centric approach to product reform. As times change, so do the needs and habits of insurance consumers, who exhibit huge and growing differences in demands, preferences, attributes, and sophistication. Therefore, we need to take a customer-centric approach to meeting demands with more forward-looking product strategies, rather than the traditional “one-product-fits-all” approach to life insurance marketing. We differentiate ourselves from rivals by leveraging the Group’s strengths in integrated financial services to build a “life insurance +” product portfolio. To meet customers’ diverse needs in daily life, we have developed ecosystems around their daily life scenarios, integrating our products with services, including health care, healthy lifestyles, elderly care, and education.

We empower our sales agents with technology, to build a high-productivity, high-income, high-quality agent force, and reform our sales channels. In sales management, we optimize our basic management to empower sales agents with multi-product sales skills. In team management, we optimize our organizational development paths under the basic management procedure for sales agents, conduct group-specific team management, and strictly implement the Company’s discipline and culture. In training management, we invest more heavily in training and upgrade the training models. We provide sales agents with highly personalized training resources, product-related resources, digital marketing resources, strong back-office support and business development tools. In the short term, we will focus on “team expansion + productivity promotion,” thus improving agent recruitment and enhancing agents’ sales skills to increase their productivity. In the long term, we will build a high-productivity, high-income, high-quality agent force.

We are digitizing our life insurance business for all-around data-driven operations. In this regard, we have built a “headquarters brain” that anticipates trends, makes timely decisions, and takes action ahead of others by predicting, tracking and intervening in operations in an effective and timely manner. With the “headquarters brain,” we are increasing our capability in managing operations, making predictions, and applying technologies. In data-driven management, we boost management efficiency by adopting “standard, refined, automatic, and smart” operations processes. In data-driven marketing, we raise customer reach rates and pursue sales targets through approaches including content marketing, social marketing, event marketing, and service marketing. To ensure sustainable, high-quality and healthy development, Ping An Life remains committed to value creation, reshaping the Ping An spirit and adhering to its core business philosophies: “strength over scale” and “quality over quantity.”

The reform projects are progressing steadily and paying off gradually. Ping An Life’s reform initiative began as a product and channel adjustment exercise in 2018, and became the all-encompassing reform program that is seen now in November 2019. So far, we have completed the top-level design of most of the projects, launched pilot programs at branches for nearly half of the projects, and started to implement projects across the Group. Despite the unprecedented difficulty and rare depth of the reform, we are filled with confidence because we have unique advantages in achieving our aspirations. With over 25 years of business experience, our life insurance management team has global vision, professional expertise, and diverse skills. Our sales force is highly competent, with industry-leading productivity. Our diverse integrated financial product portfolio provides sales agents with abundant opportunities to increase income and develop careers. Equipped with world-leading technologies, our sales agents are fully empowered to develop business. That is why we are confident that most of the reform projects will be implemented this year.

In the first half of 2020, the Company maintained stable operations through reforms and business development. Despite the complex, challenging environment and headwinds, the Company maintained stable operations through key measures including transformation toward online operations and enhancement of risk management under the “finance + technology” and “finance + ecosystem” strategies. Operating profit attributable to shareholders of the parent company for the first half of 2020 increased by 1.2% year on year to RMB74,310 million. The annualized operating ROE was 21.6%. Despite the short-term adverse impact on economic growth, Ping An attaches importance to shareholder returns and will pay an interim dividend of RMB0.80 per share in cash, up 6.7% year on year. Retail customer development continued to yield strong results thanks to ecosystem development. As of June 30, 2020, retail customers increased by 4.6% from the beginning of 2020 to 210 million. In the first half of 2020, Ping An acquired 18.09 million new customers, of whom 35.4% were sourced from internet users within the Group’s five ecosystems. Contracts per customer rose by 1.9% from the beginning of 2020 to 2.69. The value contributions from corporate business cross-selling grew steadily under the integrated financial business model of “one customer, multiple products, and one-stop services.” Ping An takes a segmented approach to customer development, providing strategic customers with integrated “commercial banking + investment banking + investment” services, while serving small and micro-business customers online. In the first half of 2020, the new financing scale achieved through corporate business cross-selling climbed by 170.2% year on year. The written premium of the corporate channel achieved through cross-selling grew by 168.4% year on year.

Our core financial businesses withstood severe tests as we rapidly responded to COVID-19 and transformed toward online operations. Amid the COVID-19 epidemic, Ping An Life conducted the reform program while maintaining business growth, and rapidly established an industry-leading online operations model. As of June 30, 2020, Ping An Life’s sales agents increased by 1.2% from March 31, 2020 to 1.145 million. Ping An Property & Casualty’s business grew as the premium income increased by 10.5% year on year, with a combined ratio of 98.1%, indicating better-than-industry business quality. As of June 30, 2020, the “Ping An Auto Owner” app had over 109 million registered users, up 17.8% from the beginning of 2020. In June 2020, the app had over 27 million monthly active users. Ping An Bank maintained stable business operations and strengthened provisions. Amid the COVID-19 epidemic, Ping An Bank quickly resumed business by advancing online digital operations. In the first half of 2020, revenue increased by 15.5% year on year to RMB78,328 million. As of June 30, 2020, the provision coverage ratio rose by 31.81 pps from the beginning of 2020.

We continued to enhance our technological capabilities, and fought COVID-19 with our health technology. As of June 30, 2020, Ping An’s technology patent applications increased by 4,625 from the beginning of 2020 to 26,008. Ping An topped the 2020 global fintech patent ranking list for the second consecutive year with over 1,500 fintech patent applications in the area. During the peak of the COVID-19 epidemic, Ping An Good Doctor’s online platform was accessed over 1.11 billion times. In the first half of 2020, Ping An Good Doctor’s revenue of online health care services grew strongly by 106.8% year on year to RMB695 million.

At critical moments, businesses should fulfill their social responsibilities. Amid the COVID-19 epidemic, Ping An acted rapidly to make charitable donations, offer insurance protection, serve the real economy, and provide healthtech support. The cash and supplies donated by Ping An in the first half of 2020 totaled more than RMB175 million in value. Ping An adheres to the philosophy of sustainable development. As of June 30, 2020, Ping An’s responsible investment amounted to RMB1.18 trillion. The Company focused its efforts on targeted poverty alleviation, and continued Ping An Rural Communities Support, providing RMB24,905 million for industrial poverty alleviation. Ping An’s brand value and reputation rose steadily. In 2020, the Company ranked 21st in the Fortune Global 500 list, seventh in the Forbes Global 2000 list, 38th in the BrandZTM Top 100 Most Valuable Global Brands list, and first among global insurance brands for the fifth time.

Business Outlook - For the six months ended June 30, 2020

Looking into the second half of the year, the impact of COVID-19 on China’s economy will continue due to the harsh situation in certain regions. In the short term, major economic indicators will improve as risks are mitigated and social normalcy is restored. However, in the medium and long term, uncertainties will remain due to the international environment and economic situation.

Adversity makes one stronger. There is no growth without pain. The more difficult the reform is, the more resolute we are. Today, reform is Ping An’s biggest historic mission and direction. We will uphold the faith in reform, walk the walk, and tackle difficulties and challenges with a strong sense of mission and responsibility. We will address the root causes of deep-seated problems while maintaining daily operations and advancing reform and transformation. We will make the reform a resounding success by building platforms for long-term sustainable, high-quality development, providing customers and society with reassuring, reliable insurance protection, and contributing our wisdom to the life insurance industry in China and beyond.

Source: Ping An Inc (02318) Interim Results Announcement

Business Nature

The principal activities comprise the provision of a wide range of financial products and services with a focus on the businesses of insurance, banking, asset management, fintech and healthtech.

Prospect

Looking into the second half of the year, the impact of COVID-19 on China's economy will continue due to the harsh situation in certain regions. In the short term, major economic indicators will improve as risks are mitigated and social normalcy is restored. However, in the medium and long term, uncertainties will remain due to the international environment and economic situation. Adversity makes one stronger. There is no growth without pain. The more difficult the reform is, the more resolute we are. Today, reform is Ping An's biggest historic mission and direction. We will uphold the faith in reform, walk the walk, and tackle difficulties and challenges with a strong sense of mission and responsibility. We will address the root causes of deep-seated problems while maintaining daily operations and advancing reform and transformation. We will make the reform a resounding success by building platforms for long-term sustainable, high-quality development, providing customers and society with reassuring, reliable insurance protection, and contributing our wisdom to the life insurance industry in China and beyond.

Chairman
MA Mingzhe
Contact Info
Company Address:
Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong
Web: http://www.pingan.com
Quote
HSI: 24,918.78 132.65
86.35
1.95 (2.3%)
As of16:10 23 Oct 2020
Open: 83.90 52Wk High: 101.00
Day High: 86.75 52Wk Low: 69.00
Day Low: 83.80 P/E: 9.187
Prev. Close: 84.40 Yield: 2.685%
Volume: 54.09M
Mkt Cap: 628.58B
Turnover: 4.64B NAV: 41.166
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Contact PING AN
Company Address:
Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong
Web: http://www.pingan.com

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