China Life Insurance Co Ltd reports 44.9% Net Income decline
23/03/2017 • About China Life Insurance Co Ltd (
$2628) • By InTwits
China Life Insurance Co Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Life Insurance Co Ltd doesn't have a profitable business model yet: 2016 ROIC is 0.7%
- China Life Insurance Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 0.5%.
- CAPEX is quite volatile: 29,816 in 2016, 27,144 in 2015, 21,838 in 2014, 17,645 in 2013, 10,500 in 2012
- The company has potentially unprofitable business model: ROIC is at 0.7%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Life Insurance Co Ltd ($2628) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 371,485 | 417,883 | 440,766 | 507,449 | 541,375 | 6.7% |
| Net Income | 11,061 | 24,765 | 32,211 | 34,699 | 19,127 | -44.9% |
Balance Sheet
|
|---|
| Cash | 69,452 | 21,330 | 47,034 | 76,096 | 30,283 | -60.2% |
| Short Term Debt | 68,499 | 20,426 | 56,979 | 32,210 | 83,843 | 160.3% |
| Long Term Debt | 67,981 | 67,985 | 70,612 | 70,637 | 53,437 | -24.3% |
Cash flow
|
|---|
| Capex | 5,293 | 3,724 | 5,048 | 8,384 | 5,310 | -36.7% |
Ratios
|
|---|
| Revenue growth | 0.2% | 12.5% | 5.5% | 15.1% | 6.7% | |
| Net Income Margin | 3.0% | 5.9% | 7.3% | 6.8% | 3.5% | -3.3% |
| CAPEX, % of revenue | 1.4% | 0.9% | 1.1% | 1.7% | 1.0% | -0.7% |
| ROIC | 0.7% | 1.7% | 2.1% | 2.2% | 0.7% | -1.5% |
| ROE | 5.4% | 11.2% | 12.8% | 11.4% | 6.1% | -5.3% |
China Life Insurance Co Ltd ($2628) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 219,072 | 119,073 | 113,572 | 89,658 | | | | |
| Net Income | 5,251 | 5,144 | 3,133 | 5,599 | | | | |
Balance Sheet
|
|---|
| Cash | 108,238 | 72,095 | 70,795 | 30,283 | | | | |
| Short Term Debt | 52,429 | 43,233 | 63,885 | 83,843 | | | | |
| Long Term Debt | 70,550 | 70,448 | 82,987 | 53,437 | | | | |
Ratios
|
|---|
| Net Income Margin | 2.4% | 4.3% | 2.8% | 6.2% | | | | |
Revenue and profitability
China Life Insurance Co Ltd's Revenue increased on 6.7%.
Net Income marign decreased on 3.3 pp from 6.8% to 3.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.98% in 2016. China Life Insurance Co Ltd's CAPEX/Revenue showed almost no change from 2013 to 2016. For the last three years the average CAPEX/Revenue was 1.3%.
Return on investment
The company operates at low ROIC (0.74%) and ROE (6.11%). ROIC decreased slightly on 1.5 pp from 2.2% to 0.74% in 2016. ROE decreased on 5.3 pp from 11.4% to 6.1% in 2016.
Leverage (Debt)
Debt surged on 33.5% while cash dropped on 60.2%.
Appendix 1: Peers in Insurance
Below you can find China Life Insurance Co Ltd benchmarking vs. other companies in Insurance industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Taiping Insurance Holdings Co Ltd ($966) | | 46.0% | -9.0% | 88.8% | 3.7% |
| PICC Property & Casualty Co Ltd ($2328) | 18.7% | 18.1% | 16.9% | 17.9% | |
| Target Insurance Holdings Ltd ($6161) | -7.5% | 5.3% | 5.1% | 10.0% | |
| AIA Group Ltd ($1299) | | 8.6% | 16.2% | -8.2% | 20.8% |
| Asia Financial Holdings Ltd ($662) | | -4.3% | 9.0% | -16.8% | |
| |
|---|
| Median (6 companies) | 5.6% | 7.0% | 12.6% | 0.9% | 20.8% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| PICC Property & Casualty Co Ltd ($2328) | 1.4% | 1.0% | 0.8% | 0.8% | |
| AIA Group Ltd ($1299) | 2.0% | 2.2% | 1.8% | 0.6% | 0.6% |
| China Taiping Insurance Holdings Co Ltd ($966) | 1.2% | 2.3% | 4.9% | 0.5% | 0.7% |
| Asia Financial Holdings Ltd ($662) | 0.3% | 0.0% | 14.0% | 0.3% | |
| Target Insurance Holdings Ltd ($6161) | 0.2% | 0.0% | 0.0% | 0.2% | |
| |
|---|
| Median (6 companies) | 0.7% | 0.5% | 1.3% | 0.4% | 0.6% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| PICC Property & Casualty Co Ltd ($2328) | 7.0% | 6.4% | 7.4% | 8.7% | |
| Target Insurance Holdings Ltd ($6161) | 2.7% | 5.8% | 7.4% | 6.2% | |
| China Taiping Insurance Holdings Co Ltd ($966) | 1.1% | 1.3% | 2.2% | 3.0% | 2.4% |
| AIA Group Ltd ($1299) | 3.1% | 2.9% | 3.2% | 2.5% | 3.2% |
| Asia Financial Holdings Ltd ($662) | 4.7% | 2.6% | 3.7% | 1.9% | |
| |
|---|
| Median (6 companies) | 2.9% | 2.7% | 3.4% | 2.7% | 2.4% |
|---|
