Recently, with the introduction of the new “National Nine Rules” and the Securities Regulatory Commission's delisting opinions, the overall performance of the capital market has been enthusiastic, and there is no shortage of positive expectations for future bull markets.

Earlier, CITIC Construction Investment's opinion pointed out that the A-share market experienced a sharp rise after the first two “National Nine Rules” were released, and this time the “National Nine Rules” may push the market out of the slow bullish trend.

CITIC Securities said in this regard that with the implementation of the new “National Nine Rules”, the new “1+N” capital market policy system framework has gradually become clear, and the focus of reform is shifting to the investment side, focusing on improving the quality of listed companies and investor returns, and consolidating the important foundation for the medium- to long-term healthy development of China's capital market. The short-term policy is more conducive to the general market style and dividend strategy.

According to CITIC Securities's point of view, the capital market is also continuing to test this logic. Recently, blue chips, with performance as the main line, are frequently leading the index to advance. Among them, leading insurer China Ping An's performance was impressive. On April 18, Ping An of China (02318.HK) Hong Kong stocks surged 5%, and A-shares also rose more than 3% at one point.

Looking at the industry sector level, insurance stocks have also recently begun a general upward trend. According to most institutional opinions, the new “National Nine Rules” will directly benefit the insurance sector.

(Hong Kong stock insurance sector quotes on April 18, source: Futu Market)

From the author's point of view, on the one hand, as the bull market expectations brought about by the new “National Nine Rules” heat up, it will bring direct benefits to the asset side of the insurance sector and help insurers repair their valuations.

On the other hand, from a policy perspective, in fact, relevant arrangements have also been made for the development of the insurance industry in the new “Nine National Rules” to catalyze capital market attention.

The new “National Nine Rules” propose optimizing the policy environment for insurance fund equity investment, implementing and improving performance evaluation methods for state-owned insurance companies to better encourage long-term equity investment; improve the insurance fund equity investment supervision system, and optimize the information disclosure requirements for listed insurance companies.

In response, relevant experts said that the new policy encourages insurance funds to actively participate in the capital market and increase the scale of equity investment. This is expected to increase insurance companies' investment channels, optimize asset allocation, and further enhance their profitability. Second, optimizing the policy environment for insurance fund equity investment and implementing and improving performance evaluation methods for state-owned insurance companies will help stimulate insurance companies' enthusiasm to invest, encourage them to invest in long-term equity, and stabilize the capital market.

Furthermore, the new “National Nine Rules” also proposed increasing incentives for companies with high-quality dividends, taking more measures to increase dividend rates; and enhance the stability, sustainability, and predictability of dividends. Obviously, for the insurance sector, which has long had excellent performance and stable dividends, this will undoubtedly help it to be further favored by the market.

In fact, in addition to policy incentives such as the new “National Nine Rules,” the reversal of the insurance sector under long-term undervaluation is also becoming the unanimous expectation of institutions.

A recent Guojin Securities Research Report indicated that April has entered the earnings season, and the overall market allocation style is pro-cyclical. Insurance stocks are at the bottom of the valuation, compounded by weak first-quarter statements (NBV is expected to grow rapidly, profit is expected to be relatively stable), which is expected to lead to a phased rebound in valuation. Prior to that, Dongwu Securities's research report also mentioned that investment opportunities in insurance stocks are gradually shifting from the left to the right.

Focusing on the company level, Ping An of China has been favored by many market institutions since the financial report was announced in late March.

Looking through the research reports of major brokerage firms, the vast majority of brokerage firms rated China Ping An positively, mainly focusing on positive ratings such as “buy,” “highly recommended,” “increase in holdings,” and “superior to the market.” These ratings reflect that brokerage firms are generally optimistic about Ping An China's performance, market prospects, and valuation level. At the same time, some brokerage firms have also given specific target prices, showing expectations for the upward potential of Ping An's stock price in China.

From the logic of the major agencies that are optimistic about safety, the following aspects are worth paying attention to.

First, I am optimistic about the company's performance and expected growth.

In response, UBS pointed out that with the stabilization of the macroeconomic and market environment, Ping An's operating profit is expected to rebound, and believes that the company's capital situation and financing flexibility will continue to support the growth of dividends per share.

BOC International, on the other hand, expects Ping An's operating profit OPAT to rise 11% year on year in 2024. Among them, life insurance and health insurance business OPAT is expected to remain flat year on year, financial insurance underwriting profit is expected to rise significantly year on year, net profit from banking business is expected to maintain steady growth, the scale of losses in the asset management sector is expected to narrow, the profit contribution of the technology sector is expected to pick up; operating ROE is expected to remain around 14%. It is optimistic about the company's leading competitive advantage in “comprehensive finance+technology”, and it is expected that the main performance indicators in 2024 are expected to pick up from the low base of 2023.

China Merchants Securities, on the other hand, believes that in a situation where supply and demand for savings insurance are strong, Ping An's NBV growth rate has exceeded expectations, and it is expected that a good start in 2024 will also achieve good results. The company's asset-side OCI shares account for a relatively high share, which not only provides continuous dividend cash flow, but also has a strong ability to withstand market fluctuations.

Second, institutions are optimistic about the company's ecological advantages and channel reforms.

Changjiang Securities believes that the company continues to push forward channel reforms, emphasizes supply-side innovation, and is also deeply involved in healthcare and comprehensive finance businesses. It is expected that its ecosystem advantages will help the company build future product and pricing barriers.

Haitong Securities said it is optimistic that the results of the company's life insurance reform will be gradually released, the team quality will continue to improve, and the comprehensive financial advantage+healthcare ecosystem layout will enable long-term performance growth.

Cinda Securities, on the other hand, believes that the company's life insurance and health insurance business has gradually bottomed out and rebounded, the business quality has continued to improve, and the agency team is expected to stabilize. At the same time, multiple channels such as banking insurance and gridded communities are expected to continue to provide business growth, and the NBV share is expected to continue to rise. Furthermore, the company's continuous reform performance on both sides of the asset burden is compounded by the implementation of current intensive macroeconomic policies. Both sides of the asset and debt are expected to usher in marginal improvements, and balance and liability are expected to be further optimized and the steady growth of EVs.

At the same time, brokerage firms also paid attention to the dividend highlights of Ping An China.

Dongwu Securities said that the company's annual dividend was 2.43 yuan in cash per share, exceeding expectations of 2.39 yuan, an increase of 0.4% over the previous year, and the operating profit to parent (OPAT) dividend rate reached 37.3%, slightly exceeding expectations.

Cinda Securities, on the other hand, mentioned that Ping An's high-quality dividend level highlights the company's steady operation and practical actions to focus on shareholder returns.

According to BOC International, the industry's investment logic has switched from a growth logic to high dividends based on stable profitability, while the dividend rate of Ping An Hong Kong stock is close to 8%. At the same time, the company's ability to pay dividends in the medium term is expected to be guaranteed.

Shen Wan Hongyuan said that the company's dividends exceeded expectations, and the corresponding dividend rates for A/H shares reached 6.0%/8.2%, respectively. The company's performance is resilient and flexible. The high dividend logic is recognized by the market in the next stage, which is expected to attract incremental capital inflows and help boost valuation.

Furthermore, several agencies mentioned Ping An's current valuation level.

According to Shen Wan Hongyuan's research, the company's valuation is currently at a historically low level, and the market's reaction to real estate risks and short-term performance fluctuations is phased and overreacted.

Institutions such as BOC International and Daimo emphasized the company's long-term development strategy and sound business foundation to support subsequent performance.

BOC International believes that the company has the advantage of comprehensive finance, and its core business is expected to continue to provide stable profit contributions in the medium term. Damo pointed out that the company can maintain stable dividends and ease the concerns of some shareholders. The bank believes that some of its core businesses will reach a turning point. If the company's asset management business can be successfully improved, it is expected that this will further support the stock price rebound.

In fact, Ping An's management has also repeatedly stated to the outside world that the company's current stock price is undervalued.

Earlier, at the 23-year results conference, Fu Xin, Deputy General Manager of Ping An of China, mentioned that the current value of the company is undervalued, and the stock price does not fully reflect the company's due value. Judging from core indicators such as dividend rates, for the future, Ping An China is a good choice for value investment.

Xie Yonglin, general manager and co-CEO of Ping An of China, also said, “The company's PB and PE are indeed very low, but I believe the gold will always shine, and the price will always return to a position consistent with value.” It believes that the core business of Ping An in China is very stable, and at the same time it is in a good industry, and the company's “comprehensive financing+medical care” strategy is promising.

Judging from Ping An's current layout, Ping An's “Comprehensive Finance+Health Care” strategy is being viewed as an upgraded version of the “Wells Fargo Bank+Joint Health” model. On the one hand, in terms of comprehensive finance, Ping An's financial license is complete, and the number of individual customers has reached 230 million. The “high value, high growth, and high retention” customer industry has become the core foundation for the company's continued steady development. On the other hand, Ping An continues to build new value growth by building a medical and elderly care ecosystem to provide customers with more comprehensive health and longevity protection. In the future, as this strategic model continues to run, Ping An's valuation is also expected to break away from traditional financial valuation frameworks and usher in new opportunities for value restructuring.

Taken together, the logic that major institutions are optimistic about safety mainly focuses on various aspects such as the company's performance growth, ecological advantages, low valuation, and value restructuring under long-term development strategies. However, these factors also support their optimism about Ping An's subsequent performance. Compared with the opinions of ordinary investors and professional investment institutions, it provides a more rational and professional window for the outside world to examine Ping An. This not only provides confidence in the market, but also provides an important reference basis for investors' decisions.