China Life Closed at All Time High
It was just a week ago I was troubled by the steep decline of China Life Insurance (LFC) after the stock lost more than $12 in two weeks. Sure the market was cooperating during that time period when everything was down, but the more than 18% drop was a little bit scary. Then just as the speedy downhill the stock had went through since August 1st, LFC climbed back at even greater pace. In the past five trading days, LFC not only made up all the ground it lost since August 1st, it actually closed at all time high of $67.15 a share Friday.
According to Xinhua Financial News, LFC will report earnings tomorrow. Let’s see how the stock moves after the report.
China Life Insurance Co Ltd is expected to report on Monday a net profit of 18.46-19.82 bln yuan for the first-half to June, up 106-121 pct from 8.97 bln achieved a year earlier, driven mainly by strong investment income, analysts said.
The mainland insurer said last month that its first-half net profit could be up over 100 pct due to steady insurance business growth and a substantial increase in investment gains.
Credit Suisse expects the company, which is listed both in Hong Kong and Shanghai, to report a net profit of 19.04 bln yuan for the six months to June, on strong growth in investment income.
The brokerage estimates net investment income for the period at 18.11 bln yuan, up 60 pct year-on-year, while realized and unrealized gains are seen at 31.38 bln yuan.
Net investment yield is seen coming in at 4.7 pct.
“We believe that China Life struggled to maintain sales momentum in first half, with portfolio run-off, equity competition, bank competition and stepped up efforts from direct competitors,” Credit Suisse said, but added that net earned premiums should rise 8.5 pct to 58.88 bln yuan.
HSBC Securities gave the most optimistic forecast for the insurer, with net profit seen up 121 pct at 19.82 bln yuan.
“We expect earnings in the first half to surge on strong A share performance. (But) whether the momentum can continue in the second half depends on whether the stock bubble is going to last or burst,” it said.
It expects China Life’s total investment income to rise 147 pct to 43.49 bln yuan in the first half, while net earned premiums and policy fees are seen up 17.2 pct at 63.58 bln.
BNP Paribas projects a first-half net profit of 19 bln yuan, up 112 pct from a year earlier, boosted by 16.08 bln yuan stock-investment gains.
It said, however, that China Life’s insurance premium figures have been under pressure in the second quarter.
“China Life’s year-on-year premium growth at end-June was low at 8.9 pct, falling behind its full year expectation of 13 pct year-on-year,” it said, but noted that key individual insurance sales still remain intact and should support the top line in the second half of the year.
Daiwa Securities expects China Life to report a net profit of 18.46 bln yuan for the six months to June, up 105.9 pct from a year earlier.
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