On March 22, China Ping An (02318)'s 2023 annual results meeting was held simultaneously in Shanghai and Hong Kong. This was the second time since the pandemic that it used the two-location formula — the last time was the 2023 Interim Results Meeting. Adhering to this approach is the general background of the company's listing in Shanghai and Hong Kong.

At the performance conference held on the same day, many Ping An executives answered questions on performance, dividends, stock prices, business segments, etc.

“I believe the overall decline in operating profit this year was a one-off factor. We are very confident that our performance will return to high quality growth over the next three years.” At the results meeting, after presenting the annual results, Fu Xin, Deputy General Manager of Ping An of China, looked forward to the future with such confidence.

In 2023, Ping An of China achieved operating profit attributable to shareholders of the parent company of 117.989 billion yuan, a year-on-year decrease of 19.7%. However, in terms of core business, in 2023, the total operating profit attributable to shareholders of the parent company from Ping An's three businesses of life insurance and health insurance, Ping An Industrial Insurance, and Ping An Bank reached 140.913 billion yuan, a slight decrease of 2.8% over the previous year, and remained stable overall.

In addition to the three core businesses that contribute to profits, asset management and other businesses and merger offsets are negative contributions. For example, Ping An Asset Management with a scale of 7 trillion yuan has operating profit of -20.747 billion yuan in 2023, a year-on-year decrease of 23.030 billion yuan. This is the main factor driving down the decline in China's Ping An operating profit. It is also similar to the year-on-year decrease in operating profit of Ping An of China.

Employment performance declined, and Fu Xin's operations were related to the macro environment, credit risk business, and prudent preparation strategies. Take the former as an example. “The challenging decline and turbulence of the capital market over the past year has had a great impact on the financial industry, including the insurance industry. But we believe the decline in the entire capital market has bottomed out.” Fu Xin said.

She further explained that confidence comes from three aspects. First, the main business is very steady. Life insurance, industrial insurance, banking, and major business sectors, excluding one-off factors, are growing positively. The results of life insurance reforms over the past few years have been significant. As can be seen from the 36.5% positive growth in NBEV (value included in new business), this will be a solid foundation for unlocking profits in the future. Comprehensive finance and medical care are constantly being promoted, and they are continuously collaborating with the main business. The implementation of such strategies is very effective.

Second, Ping An of China has a customer base of 230 million, and customer acquisition costs are far lower than those of its peers, or even lower than before. Life Insurance Bank's customer acquisition cost is 5-70% of its peers. With such a large customer base, low customer acquisition costs, good customer acquisition efficiency, high customer retention, and low risk costs, I believe this part will be released in the future. “Our confidence in the future comes from a solid foundation.”

Third, in the past year, due to fluctuations in capital markets and rising credit risk, China Ping An has taken some steps. In particular, in the fourth quarter of last year, the company took the initiative to carry out risk management and take the initiative to carefully plan provisions, laying the foundation for the enterprise on the basis of a consolidated balance sheet. I have confidence in the growth of performance over the next three years, and I am confident in the growth of dividends.

In recent years, Ping An of China's “Comprehensive Finance+Medical Care” strategy has been promoted collaboratively. As of the end of December 2023, Ping An had 232 million individual customers; the proportion of customers with 4 or more contracts within the group was 25.3%, the retention rate reached 97.7%, and the average number of individual customer contracts was 2.95; nearly 64% of customers also used services provided by the medical and pension ecosystem, and customers enjoying the service benefits of the medical and pension ecosystem covered more than 73% of the new life insurance business value.

Regarding the latest developments in this strategy, Guo Xiaotao, Co-CEO of Ping An of China, revealed that judging from the comprehensive financial development trend, Ping An of China has now established a strong customer base. Although the average profit per customer has declined, customer quality is steady. The “top three” customers with high value, high growth and high retention are the foundation for the company's continued steady development in the future.

Regarding the expansion of the healthcare and pension market, Guo Xiaotao explained that Ping An of China has achieved coverage of more than 1,700 of the top three hospitals in the country, and its pension institutions have fully penetrated through 650 services in 54 cities. Furthermore, Ping An's online family doctor service in China is beginning to take off. These services can empower comprehensive finance.

Since 2023, against the backdrop of continued fluctuations in the general market and insurance sector, insurance stocks represented by Ping An of China have remained at a low level as a whole.

Regarding the current stock price performance of Ping An of China, Fu Xin further stated that the decline in stock prices is completely out of sync with the fundamentals of the entire company, and Ping An's stock price is undervalued. Whether from the perspective of PB and PE, or core business indicators such as life insurance's NBEV, and dividends, Ping An's stock price does not correctly reflect Ping An's operating performance. Whether from a fundamental perspective or looking to the future, Ping An is an excellent choice for value investment.

In terms of dividends, in 2023, Ping An of China will pay an annual dividend of RMB 2.43 per share in cash, an increase of 0.4% over the previous year. The total amount of dividends has continued to grow for 12 consecutive years.

Fu Xin said that in the past few years, the dividend policy has been very stable. The dividend ratio has been increasing for the past 12 years, and the dividend rate in the entire industry has a very competitive advantage. I am very confident in operating for the next three years and will maintain a consistent dividend policy.

Ma Mingzhe, chairman of Ping An of China, also attended the Hong Kong performance conference, but did not make any remarks. Earlier, in his annual report address, he said, “Safety is a heavy responsibility.”

He believes that in the future, those that stand out from the fierce competition will be enterprises that can effectively solve industry challenges, meet market needs, and achieve people's aspirations. Meanwhile, Ping An has formed a clear “comprehensive finance+medical care” strategy, and has accumulated five major advantages, including business model and customer size, and will surely usher in new opportunities for development in the next ten years.

At the beginning of 2024, after 20 years of absence, Ma Mingzhe once again personally assumed the position of director of the Group's Strategic Development Center, implying the beginning of a new transformation in China's peace. Previously, Ma Mingzhe emphasized many times in his internal speeches, “Strategy is the direction, culture is the soul, and talent is the guarantee.”

In addition to returning to a high-quality growth trajectory from 2024-2026 mentioned by Fu Xin, the Group's Ping An Health (01833) and Financial One Account (OCFT.US) have all set an exact schedule for profit as soon as 2024. These are all small signs that Ping An, which may enter a new growth path, is showing the world.