Chart 1: Recent correction in Ping An Insurance share price
What’s going on?
- Investors are concerned that they might be under government pressure to rescue PKU Founder;
- Investors are worried that Ping An may have to bail out other companies in the future as tasked by the authorities;
- Investors are questioning how much Ping An can benefit from this deal.
Why is Ping An Insurance buying over Founder Group?
Table 1: Overview of assets under Founder Group
| Sector | Core assets | Description |
| Finance | Founder Securities, PKU Founder Life | Businesses covering securities, futures, funds, insurance and other fields |
| Medical & Healthcare | PKU Healthcare Group, PKU Healthcare IT | Hospitals, pharmaceutical enterprise and healthcare information technology |
| Technology | Founder Technology | Business covering printed circuit boards (PCB) |
| Education | China Hi-Tech, PKU Founder Technology College | Education provider |
| Real Estate | PKU Resources | A part of their business is involved in real estate development and operation of commercial properties |
| Source: Ping An Insurance, iFAST compilations | ||
An opportunistic acquisition led by Ping An Insurance
Table 2: Ping An Insurance remains attractive
| Business segment | Shareholding | Valuation | Valuation methodology | Multiple | Weighted valuation |
| Life & Health | 99.5% | 400,239 | P/B | 3.0 | 1,200,717 |
| P&C | 99.5% | 140,710 | P/B | 2.0 | 278,068 |
| Banking | 58.0% | 451,381 | Market cap | 1.0 | 261,621 |
| Fintech & Health-tech | Disclosed | 150,897 | Disclosed Valuation | - | 150,897 |
| Securities | 97% | 32,463 | Peers P/B | 2.0 | 64,926 |
| Trust | 100% | 4,000 | Peers P/E | 15.0 | 60,000 |
| Others | 100% | 45,380 | Book value | 1.0 | 45,380 |
| Total | 2,061,609 | ||||
| # of shares | 18,280 | ||||
| End 2023 target price (RMB) | 112.8 | ||||
| End 2023 target price (HKD) | 130.1 | ||||
| Current share price (HKD) | 79.3 | ||||
| Upside potential | 64.2% | ||||
Source:
Bloomberg Finance L.P., Ping An annual reports, iFAST estimations Data as of 16 June 2021 |
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Chart 2: Ping An Insurance share price vs. EPS (HKD)
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