Ping An Alert(601318)Profit alert:1H15 net profit up ~62% on business development and inv

News

    Ping An released a profit alert today indicating that its 1H15 net profit willincrease by ~62% yoy thanks to the stable development of each businesssegment and yoy increase in investment yields. This implies a 2Q15 net profitof Rmb14,642mn (+39% yoy, vs. +85% yoy in 1Q15) and 1H15 net profit ofRmb34,606mn. It accounts for 76% of our 2015 full year estimate and 65% ofBloomberg consensus.

    DB view

    We believe the substantial growth in net profit should be expected by themarket given Ping An’s strong 1Q15 yoy growth of 85%. We noted that PingAn realized most of its investment gains in 1Q15, resulting in higher 1Q15growth than 2Q15 (+39%) while CPIC realized most in 2Q15, leading to higher2Q15 growth of +72% (vs. +53% in 1Q15).

    We maintain our Buy rating on Ping An – A with the stock currently trading at1.4x 2015E P/EV and 4.2x 2015E NB multiples assuming 0% A-share gains. Webelieve its diversified business model and continuous focus on internet financestrategy are likely to generate synergies in the long run.