Ping An Insurance Group Co of China Ltd (SEHK: 2318) reported devastating numbers in their latest first-quarter 2020 results.
The company’s business performance has been significantly affected by the recent market turmoil and domestic social uncertainties from the Covid-19 outbreak. This caused many investor doubts upon its latest earnings.
The company did see a 5% year-on-year increase in operating profit after tax (OPAT), which was mainly attributed from the growth in Life & Health Insurance and Banking Division.
However, the group’s core business – Life and Health – saw new business value (NBV) drop 24%. Meawhile, it’s overall net profit fell by 42.7% year-on-year.
I personally believe these numbers are only temporary. Below I am going to list out three factors which I think might potentially be able to generate mass contributions to the group’s earnings over the long term.
Ping An Life – business agility
Dissecting the pie individually, the Life & Health sector contributed 67.7% of the Ping An’s operating profit for the first quarter of 2020, delivering strong year-on-year growth of 23.7%.
Source: Ping An Insurance’s Investor Relations page
Although such growth was predominantly driven by the business’s lower expenses spent on claims and policyholders’ benefits, I believe the business will recover with a positive outlook given its responsive approach towards Covid-19.
The business seized the opportunity to expand its customer base with agility amid the pandemic outbreak, and leveraged its innovative technological empowerment platforms.
The company also integrated technological applications and service capabilities by selling more diversified, marketable online products with lower NBV margins.
Recently the company introduced apps such as the “Jin Guan Jia” app and the “Pocket-E” app. Such technological enhancements satisfy customer needs, and most importantly, generate big data.
All this should provide new market intelligence to prepare the company for consumers’ behaviours post-pandemic.
Even though the decision has resulted in the decline of NBV by 24% year-on-year, in the latest three-month period, the group has acquired 8.71 million new retail customers.
Within this, 34.7% were accredited to internet users from the group’s five ecosystems, i.e. financial services, healthcare, auto services, real estate services and Smart City solutions.
Such forward-looking strategic moves potentially penetrate greater market share and secure post-pandemic business growth.
Ping An Good Doctor
Ping An Healthcare and Technology Co Ltd (SEHK: 1833), also known as Ping An Good Doctor, is a world-leading online healthcare ecosystem platform that provides 24/7 online consultation services and one-stop service to its customers.
As of 1 January 2020, Ping An Insurance holds 41.27% of the company and the company’s stock price has surged more than 90% in the past two months.
Essentially, the pandemic enforced a lockdown that led the company to become one of the hottest investments but also created opportunities for the company to further explore its “mobile medical + AI technology” ability.
As per Ping An Good Doctor’s latest Sustainable Development Report, the company has attracted more than 1.11 billion visits to its online platform amid the peak of the epidemic.
Newly-registered users increased by 10 times, average daily consultations increased by nine-fold, and anti-epidemic videos have been viewed more than 98 million times.
Meanwhile, China has also promulgated favourable policies to online healthcare that will be directly beneficial to industry leaders like Ping An Good Doctor in the long run.
I expect the trend of providing healthcare services online shall continue to grow substantially in the long run.
Consumers will not only get attached to the convenience and efficiency of being able to have one-stop medical services via an app, but also realise that they can receive diagnosis and prescriptions at a greater discount online.
Faced with unexpected challenges from Covid-19, Ping An Insurance is worth investing in over the long term in view of the company’s proactive measures.
It fulfilled its mission as an insurer by remaining agile and responsive in supporting its customers. It also leveraged its cutting-edge technologies to achieve operational efficiency and mitigate the short-term impacts.