On Jul 24, 2013, we upgraded
China Life Insurance Co. Ltd.
) to Outperform from Underperform based on its strong brand name,
an extensive domestic distribution channel, strong investments
and stable ratings.
Why the Upgrade?
After posting disappointing financial results over the past
few quarters, China Life witnessed a 79.1% surge in operating
earnings in the first quarter of 2013. The operating profit of
this Zacks Rank #1 (Strong Buy) stock increased to RMB12.8
billion ($2.04 billion) from RMB6.9 billion ($1.09 billion) in
the year-ago quarter due to higher investment yield and lower
impairment losses. Moreover, total assets, return on equity and
shareholder equity improved during the quarter.
Driven by this turnaround in China Life's performance and the
improving Chinese economy, analysts raised their estimates for
the company's 2013 earnings. This resulted in a 20.6% surge in
the Zacks Consensus Estimate during the last 30 days to $2.58 per
share, up 177.4% over 2012.
Moreover, the investment income of China Life has shown
substantial improvement over the past few years. Investment
income increased 37.2% in the first quarter of 2013 due to a
change in the company's approach toward investment and increased
investment in fixed income investment assets.
Moreover, China Life has the most extensive distribution and
service network among all insurance companies operating in China.
The company's distribution network of exclusive agents, direct
sales representatives, bancasurrance outlets, customer service
managers and financial advisers is spread across the country,
making it one of the largest brands with one of the biggest
customer base in China.
Other Stocks to Consider
Other stocks in the life insurance business that are worth
American Equity Investment Life Holding Co.
) - Zacks Rank #1 (Strong Buy),
Health Insurance Innovations, Inc.
) - Zacks Rank #2 (Buy), and
StanCorp Financial Group Inc.
) - Zacks Rank #2 (Buy).
AMER EQUITY INV (AEL): Free Stock Analysis
HEALTH INS INN (HIIQ): Free Stock Analysis
CHINA LIFE INS (LFC): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
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