First, the basic principles:
Historically, China Ping An is undoubtedly a white horse with very stable fundamentals, with a compound annual growth rate of net profit of over 25%, a compound annual growth rate of over 20% in embedded value and a return on net assets of over 20%, leading the industry.
Recently, the insurance company headed by Ping An is in the transition period of the industry, which is changing from extensive development driven by the scale effect of agents to multi-channel and efficient development combining online and offline. In the transition period, the probability of performance damage is very high, and there is great uncertainty in the next three years. It can be conservatively predicted that the performance will not increase or even decline in 2-3 years. In fact, the increase of 20 19 net profit by more than 20% is a bit imaginary, and the profit income tax is reduced. In fact, the pre-tax net profit only increased by 5%, which is similar to stagnation. Personally, the decline in performance in 2020 is a normal reflection of the transition period, and the performance in 20021year is not good.
However, in the long run, I am still optimistic. At present, I still choose to insist. There are five reasons:
1. The penetration rate of China's insurance industry is far lower than that of western countries. China's insurance depth and insurance density are only 4.3% and 430 USD respectively, ranking 38th and 46th in the world respectively. This is not only far below the level of the insurance market in developed countries, but also below the average level of the global insurance industry. At present, the number of per capita life insurance policies in China is less than 1, only 0.8, which is far from developed countries. Explain that the industry space is still relatively large;
2. The peak population, mainly the post-70s, is about to age, which will bring the demand of the insurance industry. From the historical experience, the peak crowd is the initiator of the rise and fall of all industries (such as real estate industry, automobile industry, education industry);
3. In the process of China Ping 'an transformation, although the agent scale has decreased by more than 40%, the performance has not collapsed significantly. On the contrary, the per capita sales volume has increased, which at least cannot prove the failure of the transformation;
4. The recent repurchase of going concern companies by Ping An and the increase in the holdings of senior executives headed by Ma Mingzhe show the confidence of the company and management in the company's development;
5. The dividend yield of China Ping An is increasing year by year, which is not only a good gesture to give back to shareholders, but also a proof of the steady development of the company;
6. Internet companies, potential competitors, are in a bad situation recently, and the insurance industry, as a financial pillar, can't afford to lose. Personally, I think security is optimistic.
Two. Valuation:
Let's review the recent highs and lows from the perspective of P/E ratio, and see what kind of trend the valuation of China Ping An is in.
As shown below (please note that there is no restore here). China Ping An's latest low point appeared in August 2065438+2005, with a price-earnings ratio of 8 times, and then began to rise. However, judging from the situation of the A-share market, this position is only the first low point, and there are three low points behind it, which also shows the resilience of China Ping An in the stock market crash; In June of 20 18, the stock price reached a new high, and the price-earnings ratio rose to a higher position of 13 times; 20 19 1 month is adjusted back to 7 times P/E ratio; 2065438+September 2009, the stock price reached a new high, and the price-earnings ratio returned to 1 1 times; In March 2020, due to the uncertainty of transformation, the P/E ratio dropped to 8 times. 65438+In February 2020, the stock price reached a new high, and the price-earnings ratio reached 12 times. Now the stock price is nearly halved, and the price-earnings ratio is as low as 7 times (if the static price-earnings ratio is 5 times).
To understand the price-earnings ratio, we should look at it from two aspects: first, the change of earnings per share brought about by the growth of the enterprise itself, which is the source of stock price rise; Second, market group consciousness sets prices for enterprises, which not only predicts the future of enterprises, but also has prejudice caused by various situations. Because of this, the price-earnings ratio will fluctuate. Judging from the situation of Ping 'an in China, the historical performance of growth has been very good, with net profit and compound annual growth of embedded value both exceeding 20%. Therefore, we can see that the current static P/E ratio of China Ping An is eight times that of the low point in August 2065438+2005, but its share price has risen from 25 yuan at that time to 49.47 yuan now, which is the value brought by the company's own growth. Then, will there be great changes in the future growth of China Ping An? I don't think so. First of all, China's insurance industry is far from reaching a high penetration rate (compared with the United States, it is obvious that the penetration rate of the insurance industry is increasing with the growth of the national economy). Secondly, the peak of our generation's demographic dividend has entered and will continue to enter the window of demand for insurance. Finally, although Ping An, the leading insurance company in China, is actively transforming, it is an active transformation for the future. The company's fundamentals have not changed substantially, and the recent profit gap (epidemic situation, Luckin coffee payment) and other reasons are short-term effects. So at least for now, the future growth of China Ping An is relatively certain.
Then the problem is coming. Since there is no problem with long-term growth, and the pricing of market groups has reached a historical low, what should we do now? We can predict that this year's earnings per share may be affected even if it is affected by the epidemic in the short term. Considering the embedded profit in the fourth quarter of last year, in extreme cases, I assume that 202 1 net profit will decrease 15%, and it will gradually pick up in 2022, assuming an increase of 0%. Then the forecast earnings per share in 202 1 and 2022 is 6.885 yuan. Assuming that everyone's group prejudice gradually disappears, it is conservatively estimated that the P/E ratio is 10 times of the historical median. Ping An 202 1 and 2022 predict that the stock price will reach 68.85 yuan! Now 49.47 yuan, I am willing to hold it with confidence and look forward to a successful transformation and recovery of growth.
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