China Life Insurance Co. Ltd (SEHK:2628) is the largest life insurance company in China. The company, considered as a state-owned-enterprise (SOE), has about than 23% market share in the China life Insurance market at the end of 2015.
TICKER SYMBOL: SEHK:2628
MARKET CAP: HK$ 632.1 Billion (Updated 5 Aug 2016)
MARKET PRICE / SHARE: HK$ 17.7 (Updated 5 Aug 2016)
INDUSTRY: Life insurance
THE BUSINESS: China Life Insurance
China Life Insurance Co. Ltd is now the largest life insurance company in China. In 2015, the company controlled about 23% market share of the entire industry, holding more than 200 million active life policies.
The industry has been growing very fast in a controlled environment, as foreign insurance companies have yet to be allowed into the country in a big scale.
It would be interesting to see how the company and the industry would evolve as China evolves.
KEY STATISTICS (FY2015)
Net Revenue: CNY$ 509.22 Billion
Net Income: CNY$ 34.5 Billion
Total Assets: CNY$ 2.448 Trillion
Earnings per Share: CNY$ 1.22
Dividend per Share: CNY$ 0.42
Net Income Margin: 6.8%
1. Aging Population
China population is aging. As the world’s most populated country began to grow older, the need for insurance might increase as well. Moreover, as the country grows its middle class, the more educated and affluent of its people would see the need for insurance as part of their family financial planning.
This trend can be seen as China Life Insurance saw market share of the top 7 insurance companies losing ground to smaller enterprises but yet the premium growth is still growing strongly for the top 7 insurance companies; signalling strong growth in the industry.
2. Development of China Financial Infrastructure
Secondly, as China financial infrastructures developed, the insurance market will grow with it. Currently, financial markets such as its stock market, bond market, bank loans to SMEs are still relatively weak compared to other neighbouring markets.
As the financial market matures, the insurance sector has a strong part to play as well.
3. Development of Health Care Services
Similarly, the development of its health care system is also important to the growth of the insurance sector. Most insurances are linked to medical-related products, for protection, or for financial planning products. Thus, as the two key industries developed, so would the demand for more and better insurance products.
1.Too Big To Growth
Being a SOE, especially one with the largest market share in the country, it is important for investors to know that the company not only have to serve its shareholders, it has to serve its country first. At a time of national disaster, or high inflation, the company might be forced by the government to pay out excessive claims or maintain low prices to help its people.
It is the nature of being a SOE and it is something investors need to be aware of.
2. Digital Insurance
China banking sector is facing huge disruption from e-commerce players such as Alibaba Group Holdings and Tencent Holdings. These companies can be a huge threat to the traditional insurance business as well in the future.
China Life Insurance is trading at 15.7 times its earnings and offers a 2.8% dividend yield.
Ping An Insurance (HK:2318)
China Pacific Insurance (SHSE:601601)
New China Life Insurance (SHSE:601336)
Investor Relation Material:
China Life Investor Relations Team
Tel：+8610 6363 1191
Mr. LI Ke
Tel：+8610 6363 2938
Ms. Grace HOU
Tel：+8610 6363 1241
Ms. XING Yanli
Tel：+8610 6363 2960
Ms. Erin LIU
Tel：+8610 6363 1104
Add：12F China Life Plaza A, No.16 Financial Street, Xicheng District, Beijing, China 100033
Fax: +8610 6657 5512
TOP SHAREHOLDERS DIRECT INTEREST (31 June 2016)
China Life Insurance Group – 68.37%
China Securities Financial Corp – 1.97 %
Blackrock Inc – 1.63%
Morningstar – Income Statement
Morningstar – Balance Sheet
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