Insurance:Rate hike modest plus for EPS/EV, but still concerns; add on weakness银行和金融服务

研究机构：高盛高华证券 分析师： Ning M ... 撰写日期：2011年02月09日

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    The People's Bank of China (PBOC) has decided to raise deposit and loaninterest rate, effective from Feb. 9. The one-year deposit rate has beenincreased by 25bp to 3.00%, while three-year and five-year deposit ratehave been increased by 35bp to 4.50% and 45bp to 5.00%, respectively.
    Analysis。
    We think this rate hike is modestly positive for insurers’ earnings and EV, as 1)the modest rising investment return on bonds and deposits will last mid-term; 2)this rate hike, and potential follow-on rate hikes in 1H11 helps contain inflationand reduces the risks of behind-the-curve tightening which should befundamentally positive for A-share markets, though negative for n-t sentiment.
    But we also have some concerns: (1) due to the unfavorable demand/supplyrelationship for insurers in the long term bond market, the increase in long termbond yield is smaller than the rise in mid/short term bond yield, making the yieldcurve even flatter (i.e., 10-year T-bond yield to 3-year T-bond yield premium isdown 42bp to 66bp, compared to Oct 10); (2) the continued rate hike also putsupside pressure on life insurers’ policy funding costs, which limits the extent oftheir interest spread expansion.
    We estimate Taiping and Ping An are best placed among insurers to benefitfrom rate hikes, given their relatively high proportion of shorter maturitybond/deposits and higher earnings/EV sensitivity to rising bond/ securities yields.
    Our sensitivity analysis on the impact of interest rate hike (as % of 2011E pre taxprofit/2011E EV) is Taiping (1.31%/ 0.19%), Ping An (0.92%/0.15%), PICC(0.75%/NA), CPIC (0.53%/ 0.08%) and China Life (0.22%/0.04%). That said, the ratehike has been largely factored into our 2011E forecasts, thus we keep ourforecasts unchanged.
    Implications。
    We expect share price weakness in 1H11 (due to A-share market weaknessand NBV growth slowdown concerns, as we believe CBRC is likely to enforcethe new bancassurance rule after Chinese New Year) could provide good entrylevels for China insurers. We prefer A-share insurers, in particular Ping An-A(Buy, on Conviction list)/CPIC-A (Buy) and Ping An-H (Buy) as our top picks.
    We retain Neutral ratings on Taiping, China Life A/H, CPIC-H and PICC. Keydownside risks include stagflation, pricing deregulation for life and P&C;upside risk include better than expected A-share return.