Ping An Insurance HK SDR 2to1 (SGX: HPAD)

Traditionally, the financial industry isn’t known for being innovative or cutting-edge with its use of technology. Indeed, one of the biggest innovations out of the global financial industry in the past half-century has been the ATM machine – that doesn’t exactly get investors’ pulses racing.

However, in China, the innovation landscape is extremely different in financial services. And one financial conglomerate that has been leading the innovation charge over the past three decades is Ping An Insurance Group Co Ltd (SGX: HPAD).

Founded by Peter Ma Mingzhe in 1988, when he was just 33 years old, Ping An Insurance actually started life as a small unit of a state-owned enterprise in Shenzhen, China – selling bosses insurance against worker compensation claims.

Today, it’s a financial and insurance powerhouse, with a market cap of over US$128 billion. That makes it one of the most valuable insurance companies in the world. The company listed on the Hong Kong Stock Exchange in June 2004 in Hong Kong’s biggest IPO that year before listing its China “A shares” on the Shanghai Stock Exchange in March 2007.

Here’s a look at its business and how investors can determine whether it’s the right fit for their portfolio. 

Ping An: A multi-pronged insurance business

Ping An has risen to prominence on the back of its integrated financial services model. Put simply, the company is able to generate a vast amount of data and use that data effectively to price policies smartly while also maximising profits.

Ping An has various businesses like asset management and healthcare initiatives – including a majority stake in listed healthcare technology firm Ping An Healthcare & Technology (HKEX: 1833) – formerly known as Ping An Good Doctor.

However, its three main business units that make up practically 100% of its operating profits are: Life & Health (L&H), Property & Casualty (P&C), and Banking (under its Ping An Bank brand). For the whole of 2024, these units made up 79.6%, 12.3%, and 21.2%, respectively, of Ping An’s operating profit after tax (OPAT).

Virtuous flywheel of insurance

Beyond this, though, is the company’s ability to cross-sell across its various channels. The big driver of this? A huge user base across it various platforms. As of the end of 2024, Ping An had 242 million retail customers across its platforms, up 4.7% year-on-year from the end of 2023.

Integrated Finance model allows cross-selling for Ping An

Source: Ping An Insurance FY2024 earnings presentation

More importantly, Ping An’s high value customers – so those with investable assets of over RMB 500,000 (US$69,000) – saw 6% year-on-year growth, outpacing the top line expansion in its user base in 2024.

The stickiness of Ping An’s ecosystem is testament to its brand offering and position in the market, with customer retention in 2024 hitting 91%, up two percentage points from 2023. Investors also see the benefit of Ping An running its own healthcare services – via Ping An Healthcare Technology – as the data the conglomerate collects directly feeds into their pricing strategies for plans.

This virtuous “data flywheel” allows management to better position themselves within the insurance ecosystem. Being able to cross-sell products within their ecosystem is a huge scale advantage they have over fellow insurers. For example, someone purchasing a life insurance plan could then be sold an accompanying P&C plan or a potential investment product from Ping An Bank.

By collecting more data and signing more contracts with customers, Ping An can better understand their protection and investment makeup while filling any gaps that clients may have in respect of those needs.

While contracts per customer and profit per customer did fall last year, this was more a temporary reflection of the product mix and an increase in new customers versus any sort of structural decline.

Once Ping An has these customers on board, they are better able to keep them within its ecosystem and – even better – upsell them on various products in future. For investors, this is more a “delayed gratification” phenomenon as Ping An isn’t (by any measure) close to being done adding retail customers to its client base.

Solid 2024 for Ping An Insurance

Ping An Insurance reported its FY2024 results on Wednesday 19 March and, while the market didn’t like what it saw at first glance (with Ping An down over 4% the following day), it was a solid set of numbers from one of the leading insurers in China.

On the top line, revenue for 2024 came in at RMB 1.14 trillion (US$157 billion), which was up 10.6% year-on-year. While a lot of headlines may focus on net profit for Ping An soaring nearly 50% in 2024, to RMB 126.6 billion, it’s actually of little importance.

That’s because, as an insurer, its net profit is directly linked to it book of investments which moves with the ebbs and flows of the market. As we all know, markets can fluctuate and 2024 was a solid year for global financial markets.

Show me the money…or OPAT

More importantly, as Ping An management has spoken about previously, operating profit after tax (OPAT) is the core measure to watch as this is a more accurate picture of the company’s underlying profitability.

That’s because operating profitability strips out the one-time gains or investment boosts that volatile markets can provide to net profit. Instead, operating profit looks at the core business’s profitability, excluding interest and taxes, and is a better measure of how the business is progressing over the long term.

By providing a core operating profit metric, Ping An is giving investors a clearer picture of their profitability. Indeed, Ping An is unique among Chinese insurers – along with regional peer AIA Group Ltd (HKEX: 1299) – in giving investors its operating profit numbers.

Large mainland China insurers – like China Life Group Ltd (HKEX: 2928) and China Taiping Insurance Holdings (HKEX: 0966) – actually don’t break out operating profit and instead focus on the rather basic (and misleading) net profit figure.   

On the operating profit front, we can see Ping An did well with OPAT coming in at RMB 121.9 billion, up a respectable 9.1% year-on-year from 2023. That’s a huge improvement from the 20% fall in OPAT for 2023.

Group operating profit for 2024

Source: Ping An Insurance FY2024 earnings presentation

Of its 242 million customers, just over one-quarter (so nearly 61 million) hold four or more contracts with Ping An and have a retention rate of 98%.

While its L&H and Bank units saw a fall in operating profit in 2024, the huge rise in P&C more than made up for it. Furthermore, Ping An’s asset management business – which has exposure to China property – narrowed losses by nearly half in 2024.

In terms of the company’s real estate investments, these stood at around RMB 203 billion as of the end of 2024 – making up 3.5% of its insurance funds portfolio. While not exactly insignificant, it’s still down from the 4.3% share it took at the end of 2023.

What about valuation, though? In terms of price-to-book (PB) – a better gauge when looking at insurers – Ping An shares are actually trading below NAV with a PB ratio of 0.87x.

While this is slightly more expensive than peers such as China Life Insurance (0.81x) and PICC Group (0.66x), Ping An’s superior operating profit generation and enormous customer base merit this premium.

Reforming agents and that dividend honey

A multi-year agency reform programme that Ping An undertook around the time of the Covid-19 pandemic is now starting to reap dividends.

While the performance of Ping An’s agency force was always above average, management identified areas of improvement and efficiency gains. They implemented a reform programme, by utilising AI in hiring practices, and raising the bar for agents.

It’s starting to show up in the numbers. From 2023 to 2024, the average new business value (NBV) per agent per month rose 43.3% year-on-year. Meanwhile, the actual agent channel NBV climbed from RMB 25.2 billion in 2023 to RMB 31.9 billion in 2024, a 26.5% year-on-year increase.

Unsurprisingly, this improved productivity is feeding into higher OPAT and that’s also allowing Ping An to continue raising its dividend. The company hiked its 2024 dividend by 5% versus 2023 and it marked the 13^th consecutive year of dividend increases for Ping An Insurance.

Right now, investors buying into Ping An shares can get around a 5.8% dividend yield. Do remember, though, that dual-listed companies (i.e. in Hong Kong and China) are subject to a 10% dividend withholding tax from the Chinese government. Given its China “A share” listing, Ping An is also subject to this requirement. 

Risks to insure against

For investors, they also need to cognisant of various downside risks to owning Ping An Insurance.

While Chinese stock markets staged a rally in 2024 - and have been outperforming global equities so far in 2025 - any renewed drawdown in markets will impact investor sentiment as well as Ping An’s investment assets.

There’s also the macro risk implicit within the Chinese economy. If economic growth, I.e. GDP, slows markedly then that could adversely impact Ping An’s business and limit opportunities to potentially upsell existing clients or onboard new clients.

How to get access to Ping An Insurance stock?

Traditionally, buying Ping An stock would require you having to wade into the Hong Kong stock market and purchase it with a board lot of 500 shares. That would set you back around HK$23,700, or S$4,080 per board lot.

Of course, with SGX’s Singapore Depository Receipts (SDRs) of Hong Kong-listed shares, this barrier can be brought down. With the SDR’s underlying ratio of 2:1, and the minimum board lot for Singapore investors being just 100 shares, this means investors can get access to Ping An shares for as little as S$408.

SDRs give investors a beneficial interest in the underlying securities and these are held by a custodian on behalf of the SDR issuer who in turn holds on behalf of SDR holders. Not having the headache of overseas trading commissions or exchange rate fluctuations, SDRs make it much simpler for Singapore investors to access the massive Chinese market.

What about dividends, though? Well these are paid in Singapore Dollars through the CDP and will be paid after the deduction of any corporate action fees, expenses and taxes. However, ensuring your dividends come to you in local currency gives investors just one less thing to have to worry about – particularly when dealing with overseas dividend holdings.

About the Author: Tim Phillips

Tim has spent over 15 years in the finance industry with the likes of Schroders, The Motley Fool, and CGS International.

He’s passionate about helping people take control of their finances by building wealth through long-term investing and thinking more coherently on all things "money".

Tim hopes to share the experience he’s garnered having worked in asset management, securities, and private wealth. He loves breaking down complex financial topics into content that’s easy to understand and, most importantly, engaging.

Give him a follow on TikTok @timtalksmoneysg and Instagram @timtalksmoney or subscribe to his free weekly newsletter at TimTalksMoney.com for more money and investing insights.

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