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.

STOCK INFORMATION

1

TICKER SYMBOL: SEHK:2628

MARKET CAP: HK$ 632.1 Billion (Updated 5 Aug 2016)

MARKET PRICE / SHARE: HK$ 17.7 (Updated 5 Aug 2016)

SECTOR: Insurance

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%

ROE: 11.5%

KEY OPPORTUNITIES

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.

KEY RISKS

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.

VALUATION

China Life Insurance is trading at 15.7 times its earnings and offers a 2.8% dividend yield.

LISTED PEERS

Ping An Insurance (HK:2318)
China Pacific Insurance (SHSE:601601)
New China Life Insurance (SHSE:601336)

INVESTOR RELATIONS

Investor Relation Material:

Annual Report

Financial Information

China Life Investor Relations Team

Ms.LI Yinghui

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

Email:ir@e-chinalife.com

TOP SHAREHOLDERS DIRECT INTEREST (31 June 2016)

China Life Insurance Group – 68.37%
China Securities Financial Corp – 1.97 %
Blackrock Inc – 1.63%

FINANCIALS

 Morningstar China life BS
Morningstar – Income Statement

Morningstar China life IS

Morningstar – Balance Sheet

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