China Life Insurance Co Ltd Net Income surged on 68.6% and Revenue surged on 18.8%
22/03/2018 • About China Life Insurance Co Ltd (
$2628) • By InTwits
China Life Insurance Co Ltd reported 2017 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: 2017 ROIC is 1.5%
- 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: 9,619 in 2017, 5,310 in 2016, 8,384 in 2015, 5,048 in 2014, 3,724 in 2013
- The company has potentially unprofitable business model: ROIC is at 1.5%
- It operates with high leverage: Net Debt/EBITDA is 1.8x 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 | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 417,883 | 440,766 | 507,449 | 541,375 | 643,355 | 18.8% |
| Net Income | 24,765 | 32,211 | 34,699 | 19,127 | 32,253 | 68.6% |
Balance Sheet
|
|---|
| Cash | 21,330 | 47,034 | 76,096 | 30,283 | 48,586 | 60.4% |
| Short Term Debt | 20,426 | 56,979 | 32,210 | 83,843 | 89,838 | 7.2% |
| Long Term Debt | 67,985 | 70,612 | 70,637 | 53,437 | 18,794 | -64.8% |
Cash flow
|
|---|
| Capex | 3,724 | 5,048 | 8,384 | 5,310 | 9,619 | 81.1% |
Ratios
|
|---|
| Revenue growth | 12.5% | 5.5% | 15.1% | 6.7% | 18.8% | |
| Net Income Margin | 5.9% | 7.3% | 6.8% | 3.5% | 5.0% | 1.5% |
| CAPEX, % of revenue | 0.9% | 1.1% | 1.7% | 1.0% | 1.5% | 0.5% |
| ROIC | 1.7% | 2.1% | 2.2% | 0.7% | 1.5% | 0.7% |
| ROE | 11.2% | 12.8% | 11.4% | 6.1% | 10.3% | 4.2% |
China Life Insurance Co Ltd ($2628) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 269,555 | 126,825 | 143,863 | 103,627 | 23.0% | 6.5% | 26.7% | 15.6% |
| Net Income | 6,149 | 6,093 | 14,583 | 5,428 | 17.1% | 18.4% | 365.5% | -3.1% |
Balance Sheet
|
|---|
| Cash | 52,900 | 47,831 | 54,474 | 48,576 | -51.1% | -33.7% | -23.1% | 60.4% |
| Short Term Debt | 94,672 | 150,620 | 79,332 | 90,618 | 80.6% | 248.4% | 24.2% | 8.1% |
| Long Term Debt | 53,544 | 25,362 | 25,111 | 18,014 | -24.1% | -64.0% | -69.7% | -66.3% |
Ratios
|
|---|
| Net Income Margin | 2.3% | 4.8% | 10.1% | 5.2% | -0.1% | 0.5% | 7.4% | -1.0% |
Revenue and profitability
China Life Insurance Co Ltd's Revenue jumped on 18.8%. Revenue growth showed slow down in 17Q4 - it was 15.6% YoY.
Net Income marign increased slightly on 1.5 pp from 3.5% to 5.0% in 2017.
Capital expenditures (CAPEX) and working capital investments
In 2017 China Life Insurance Co Ltd had CAPEX/Revenue of 1.5%. China Life Insurance Co Ltd's CAPEX/Revenue showed almost no change from 2014 to 2017. It's average level of CAPEX/Revenue for the last three years was 1.4%.
Return on investment
The company operates at low ROIC (1.46%) and ROE (10.33%). ROIC increased slightly on 0.72 pp from 0.74% to 1.5% in 2017. ROE increased on 4.2 pp from 6.1% to 10.3% in 2017.
Leverage (Debt)
Debt dropped on 20.9% while cash jumped on 60.4%.
Appendix 1: Peers in Insurance
Below we provide China Life Insurance Co Ltd benchmarking against other companies in Insurance industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Manulife Financial Corp ($945) | -37.7% | 203.5% | -38.2% | 57.5% | |
| AIA Group Ltd ($1299) | 8.6% | 16.2% | -8.2% | 20.8% | |
| PICC Property & Casualty Co Ltd ($2328) | 18.1% | 16.9% | 17.9% | 7.9% | |
| China Taiping Insurance Holdings Co Ltd ($966) | 46.0% | -9.0% | 88.8% | 3.7% | |
| |
|---|
| Median (4 companies) | 7.0% | 12.6% | 0.9% | 14.3% | |
|---|
Top companies by CAPEX/Revenue, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| PICC Property & Casualty Co Ltd ($2328) | 1.0% | 0.8% | 0.8% | 0.7% | |
| China Taiping Insurance Holdings Co Ltd ($966) | 2.3% | 4.9% | 0.5% | 0.7% | |
| AIA Group Ltd ($1299) | 2.2% | 1.8% | 0.6% | 0.6% | |
| Manulife Financial Corp ($945) | 0.0% | 0.0% | 0.0% | 0.0% | |
| |
|---|
| Median (4 companies) | 0.5% | 1.3% | 0.4% | 0.6% | |
|---|
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| PICC Property & Casualty Co Ltd ($2328) | 6.4% | 7.4% | 8.7% | 5.4% | |
| AIA Group Ltd ($1299) | 2.9% | 3.2% | 2.5% | 3.2% | |
| China Taiping Insurance Holdings Co Ltd ($966) | 1.3% | 2.2% | 3.0% | 2.4% | |
| Manulife Financial Corp ($945) | 1.9% | 2.0% | 1.1% | 1.2% | |
| Target Insurance Holdings Ltd ($6161) | 5.8% | 7.4% | 6.2% | | |
| |
|---|
| Median (6 companies) | 2.7% | 3.4% | 2.7% | 2.8% | |
|---|
