May Insights Into Financial Stocks: China Taiping Insurance Holdings Company Limited (HKG:966)
China Taiping Insurance Holdings Company Limited (SEHK:966), a HK$95.60B large-cap, operates in the insurance industry, which is a large constituent of the economy by virtue of the amount of premiums it collects and the role it plays by covering personal and business risks. Financial services analysts are forecasting for the entire industry, a positive double-digit growth of 16.08% in the upcoming year , and an enormous growth of 64.65% over the next couple of years. This rate is larger than the growth rate of the Hong Kong stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether China Taiping Insurance Holdings is lagging or leading in the industry. Check out our latest analysis for China Taiping Insurance Holdings
What’s the catalyst for China Taiping Insurance Holdings’s sector growth?
Amid challenges from regulatory disruption, increasing consumer expectations and sluggish sales, insurers will increasingly consider technology integration to drive growth and efficiency. Over the past year, the industry saw growth in the twenties, beating the Hong Kong market growth of 16.11%. China Taiping Insurance Holdings leads the pack with its impressive earnings growth of 28.44% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with China Taiping Insurance Holdings poised to deliver a 26.33% growth over the next couple of years compared to the industry’s 16.08%.
Is China Taiping Insurance Holdings and the sector relatively cheap?
The insurance industry is trading at a PE ratio of 16.25x, relatively similar to the rest of the Hong Kong stock market PE of 13.18x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 10.62% on equities compared to the market’s 9.55%. On the stock-level, China Taiping Insurance Holdings is trading at a PE ratio of 16.25x, which is relatively in-line with the average insurance stock. In terms of returns, China Taiping Insurance Holdings generated 9.75% in the past year, in-line with its industry average.
Next Steps:
China Taiping Insurance Holdings’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If China Taiping Insurance Holdings has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at China Taiping Insurance Holdings’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has 966’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Taiping Insurance Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
