WASHINGTON (Reuters Breakingviews) - Ping An Insurance has a long way to go to be considered a tech company. The $170 billion Chinese conglomerate delivered a 45 percent increase in third-quarter profit, powered in part by online users and artificial-intelligence initiatives. It also has added 300,000 agents this year, suggesting some old-fashioned growth in selling policies. That makes it hard to value it the same silly way as newly listed rival Zhong An.
Like business leaders everywhere, including the top brass at JPMorgan, Ping An Chairman Ma Mingzhe wants his group perceived as an inventive tech outfit rather than a lumbering financial supermarket. It’s presenting new metrics to help make the case and touting over 2,000 patent applications. Ping An also is pumping more than $2 billion into technology research this year and a venture-capital fund.
Despite the hype, Ping An is mainly an insurance provider with technology increasingly behind it, not vice versa. Through the first nine months of the year, life, healthcare, property and casualty profit accounted for 71 percent of the total. And though fintech is slowly permeating these divisions, on its own it accounted for just 1 percent. The so-called bancassurance model of systemically significant Ping An, which incorporates lending and asset management, also has been a flop elsewhere.
Political considerations could make a tech valuation difficult, too. Chinese regulators cracked down this year on the likes of Anbang Insurance and Foresea Life for their aggressive growth and use of leverage. Although that probably helped Ping An grab market share, it doesn’t mean it, too, won’t eventually get swept up in the scrutiny. Short interest in the company’s Hong Kong stock has swelled to 17 percent of its market capitalization, up from around 11.5 percent at the state of the year, according to data from market analyst David Webb’s site.
There are nevertheless indications that Ping An is making headway on its tech dreams. It trades at about 2.5 times book value, higher than peers China Life Insurance, China Pacific Insurance and AIA Group, according to Eikon data. Zhong An Online Property and Casualty Insurance, though, co-founded by Ma alongside Alibaba’s Jack Ma and Tencent’s Pony Ma, just reported a net loss and yet fetches over five times book value. Only in that wacky context does Ping An look like a bargain.
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