MS：PICC P&C Company Ltd.

摩根斯坦利：中国人民财产保险 公司研究

April 19, 2007 15页

Maintain Underweight; raise target to HK$4.12:
PICC reported 2006 net profit of RMB2.08 billion, 3%
above our estimate and 12% below consensus. While
we have a positive outlook on tax and investment
income over the next couple of years, PICC’s weak
underwriting business continues to support an
Underweight rating.
Underwriting proves a tough business: Underwriting
results down 60% YoY. PICC continued to lose market
share. Reasonable top-line growth was partly helped
by launch of auto compulsory third-party liability
business. Both loss and expense ratio were higher
YoY. Tax rate remained high at 45% due to non-tax
deductibility of certain cost items. Expensive to grow
business.
Investment results likely positive for next two
years: Domestic equity market continued to be strong.
Little sign of liquidity abating. Equity holding was 13%
at end-2006 vs. 5.5% at end-2005. Some RMB1 bil in
unrealized gains relating to equity holding will be
booked in 2007 and RMB600-700 mil in 2008,
according to management.
Upward earnings revisions: Raising our 2007