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China Life Insurance Co. Ltd. Message Board

  • draqu2000 draqu2000 Dec 31, 2003 10:57 AM Flag

    8 reasons why lfc will top $40

    1) Long term profitability: Lfc has 45% China life insurance market share, a real leader, has clients' loyalty (few people want to buy life insurance from small or foreign companies as small or foreign ones may disappear in 30-50 years which is the average period of a life policy), so it has pricing power to ensure its long term profitability.
    2) High growth perspective: Mainland China's life insurance density is a tiny portion compared to Hongkong, Taiwan, Japan, South Korean and world average. China has fast growing middle income earners. The growth potential is huge.
    3) Lower valuation: At share price about $35, lfc has past 12 months trailing p/b and p/e ratios about 2.2 and 21 respectively, quite reasonable if not under valued, compared with other life insurance companies (it IS under valued if you consider China's high growth and possible appreciation of China Yuan agaistst US$).
    4) Before December 30, almost all messages were positive on lfc, which was not too good. Since yesterday the view point is full of both negative and positive, which is healthy sign. Those who bought lfc shares now are more logical than before.
    5)Though negative opinions and moderate drop in Hongkong at the beginning of last night due to the big fall here yesterday, lfc recovered Hongkong finally. This shows Hongkong investors' confidence on lfc. As Hongkong people knows China better than North America investors, they put money in lfc more like investors than North America's. Unlike lfc's big swing in New York stock exchange, Lfc share price rose more steadly almost everyday in Hongkong stock exchange.
    6)World class conservative growth oriented investor, Warren Buffet, may have bought lfc shares through Morgan Stanley, as indicated at:
    http://quote.bloomberg.com/apps/news?pid=conews&tkr=LFC:US
    As we know, when Warren Buffet buy, he look for 10-bag with margin of safety.
    7)Lfc will be included in world stock index in January 6, 2004. This means all world stock index fund holders will buy lfc shares.
    8)It is a blue chip with low risk.

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    • Some additons to this -

      "3) Lower valuation: At share price about $35, lfc has past 12 months trailing p/b and p/e ratios about 2.2 and 21 respectively, quite reasonable if not under valued, compared with other life insurance companies (it IS under valued if you consider China's high growth and possible appreciation of China Yuan agaistst US$)."

      As I understand it, you can't trade Yuan like other currencies due to Chinese gov't controls. Eventually, they will have to put the Yuan on the market, and everything I have heard indicates it has been held artificially low vs. the dollar to help Chinese exports. Once the Yuan is fairly valued, all Chinese stocks will get a boost, which could be huge.

      9) Many people are laboring under the assumption that the short interest has yet to make itself known, when actually the shorts have been in for about a week already.

 
LFC
43.27-0.81(-1.84%)Sep 19 4:10 PMEDT

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