According to the report released by CICC, it maintains the rating of 'outperform the market' for Ping An Insurance (02318) with a target price of HKD 55.65.

The report stated that Ping An issued USD 3.5 billion worth of H-shares convertible bonds. CICC believes that the convertible bond issuance of Ping An will have the following impact: 1) Potential dilution effect is only about 3%: Assuming the bonds are fully converted at the price of HKD 43.71 per share and no other shares are issued, the convertible shares account for about 3% of the company's existing shares. 2) Short-term impact on capital has been basically digested: Based on past cases, some institutions will sell their stocks to hedge when subscribing to convertible bonds. The company used delta allocation method (non-issuance of new stocks) to systematically handle sell orders. According to the company's announced premium level, the bank expects the discount rate of the hedge sale on the previous day (July 15th) to be about 3%. The one-time capital impact caused by the issuance has been basically digested on the same day.

The bank stated that the recent market's increase in financing expectations for Ping An Insurance has suppressed the company's stock performance. The bank believes that the core operational capabilities of Ping An Life Insurance are still outstanding, and its existing business has low cost (flattened yield rate is less than 2%), long duration of existing assets (~13 years), still at a relatively high level of net investment yield rate (4.2% in 2023), and the current trend of the liability side will help Ping An Life achieve resilient profitability performance in the downward interest rate environment. After the issuance of convertible bonds, it is recommended to pay attention to the company's interim report and subsequent performance, stability of the company's high dividend, and the execution of future health preservation strategies.