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Chinese Life Insurance Company Is Near a 52-Week Low

- By Alberto Abaterusso

China Life Insurance Co. Ltd. (LFC) is trading slightly above its 52-week low of $10.52. The share price at market close on Monday, Sept. 10 was $10.64, nearly 70% below its 52-week high of $17.85.

The stock was down 0.42% to $10.6 in early trading on Tuesday.

The stock price is below the 200-, 100- and 50-day simple moving average lines. The market capitalization of the Chinese life insurance company is $80.63 billion on the New York Stock Exchange.

The stock has a price-book ratio of 1.87 versus an industry median of 10.18, a price-earnings ratio of 16.87 versus an industry median of 13.25 and a price-sales ratio of 0.96 versus an industry median of 0.82.

The stock appears to be cheap. According to the Peter Lynch chart below, the share price is below the earnings line of $14.6.

Current valuations have pushed the forward dividend yield up to 2.93%, which is on par with the yield on 10-year U.S. Treasury bonds and 69% higher than the S&P 500's current dividend yield of 1.77%.

The forward annual dividend is 32 cents. The company has distributed dividends since 2006 and, over the last five years, has consistently increased revenues, net income and net profit margin.

The chart below indicates the company's net profit margin has grown nearly 3% on average over the last five years and is now 5.61% versus an industry median of 4.69%.


GuruFocus rated the company's profitability and growth 4 out of 10.

Analysts are projecting earnings growth of 20.4% in 2019, 5.4% in 2020 and 27.4% on average each year over the next four years.

China Life Insurance is headquartered in Beijing and provides life insurance and annuity products.

The company's business is structured in four core segments: life insurance, health insurance, accident insurance and other.

As of the second quarter, China Life Insurance has approximately $467.3 billion in total assets and approximately $417 billion in total liabilities. The equity was valued at $50.3 billion. Total assets include $344.27 billion in long-term investments. The company also has around $7.7 billion in cash on hand and securities.

The company's financial strength was rated 5 out of 10 by GuruFocus.

China Life has 5,652.94 million shares outstanding, of which 0.39% is held by institutions.

During the second quarter, Jim Simons' Renaissance Technologies reduced its holding by 80.98% to 17,400 shares.

For Wall Street, the stock is a hold. The average target price is $15.4.

Disclosure: I have no positions in any securities mentioned in this article.

This article first appeared on GuruFocus.