New China Life Insurance Co Ltd reports 42.5% Net Income decline in 2016
29/03/2017 • About New China Life Insurance Co Ltd (
$1336) • By InTwits
New China Life Insurance Co Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- New China Life Insurance Co Ltd doesn't have a profitable business model yet: 2016 ROIC is 1.2%
- New China Life Insurance Co Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 0.5%.
- CAPEX is quite volatile: 1,089 in 2016, 860 in 2015, 4,151 in 2014, 2,124 in 2013, 773 in 2012
- The company has potentially unprofitable business model: ROIC is at 1.2%
- It operates with high leverage: Net Debt/EBITDA is 2.9x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
New China Life Insurance Co Ltd ($1336) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 111,699 | 128,217 | 142,094 | 157,918 | 144,796 | -8.3% |
| Net Income | 2,933 | 4,422 | 6,406 | 8,601 | 4,942 | -42.5% |
Balance Sheet
|
|---|
| Cash | 25,066 | 18,570 | 14,503 | 13,904 | 14,230 | 2.3% |
| Short Term Debt | 55,437 | 52,211 | 59,234 | 19,838 | 39,255 | 97.9% |
| Long Term Debt | 15,000 | 15,000 | 19,000 | 19,000 | 14,000 | -26.3% |
Cash flow
|
|---|
| Capex | 1,339 | 1,995 | 2,278 | 2,475 | 1,932 | -21.9% |
Ratios
|
|---|
| Revenue growth | 2.8% | 14.8% | 10.8% | 11.1% | -8.3% | |
| Net Income Margin | 2.6% | 3.4% | 4.5% | 5.4% | 3.4% | -2.0% |
| CAPEX, % of revenue | 1.2% | 1.6% | 1.6% | 1.6% | 1.3% | -0.2% |
| ROIC | 0.9% | 1.3% | 1.6% | 2.0% | 1.2% | -0.9% |
| ROE | 8.7% | 11.8% | 14.6% | 16.2% | 8.5% | -7.7% |
New China Life Insurance Co Ltd ($1336) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 54,794 | 32,229 | 30,098 | 27,803 | | | | |
| Net Income | 1,994 | 1,339 | 1,453 | 156 | | | | |
Balance Sheet
|
|---|
| Cash | 14,512 | 12,874 | 11,488 | 14,132 | | | | |
| Short Term Debt | 19,108 | 28,848 | 28,368 | 39,255 | | | | |
| Long Term Debt | 19,000 | 19,000 | 14,000 | 14,000 | | | | |
Ratios
|
|---|
| Net Income Margin | 3.6% | 4.2% | 4.8% | 0.6% | | | | |
Revenue and profitability
The company's Revenue decreased on 8.3%.
Net Income marign decreased on 2.0 pp from 5.4% to 3.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 1.3%. CAPEX/Revenue showed almost no change from 2013 to 2016. Average CAPEX/Revenue for the last three years was 1.5%.
Return on investment
The company operates at low ROIC (1.16%) and ROE (8.45%). ROIC decreased slightly on 0.87 pp from 2.0% to 1.2% in 2016. ROE decreased on 7.7 pp from 16.2% to 8.5% in 2016.
Leverage (Debt)
Debt surged on 37.1% while cash increased on 2.3%.
Appendix 1: Peers in Insurance
Below you can find New 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) | | 18.1% | 16.9% | 17.9% | 7.9% |
| Target Insurance Holdings Ltd ($6161) | | 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) | | 7.0% | 12.6% | 0.9% | 14.3% |
|---|
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% | 0.7% |
| 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% | 5.4% |
| AIA Group Ltd ($1299) | 3.1% | 2.9% | 3.2% | 2.5% | 3.2% |
| China Taiping Insurance Holdings Co Ltd ($966) | 1.1% | 1.3% | 2.2% | 3.0% | 2.4% |
| Manulife Financial Corp ($945) | 0.9% | 1.9% | 2.0% | 1.1% | 1.2% |
| Target Insurance Holdings Ltd ($6161) | 2.7% | 5.8% | 7.4% | 6.2% | |
| |
|---|
| Median (6 companies) | 2.9% | 2.7% | 3.4% | 2.7% | 2.8% |
|---|
