China Life Insurance (LFC)

Headquartered in Beijing, China, China Life Insurance Company Ltd. (LFC - Analyst Report) is China's leading life insurance company. As of December 31, 2008, China Life had about 716,000 exclusive agents, over 12,600 direct sales representatives, and nearly 94,000 non-dedicated agencies throughout China.

LFC's FY08 results were disappointing, stemming from a combination of external negative factors -- snow, earthquake, and the global financial crisis. However, despite growing competition as well as volatile capital market, the company seems to be in a better position than its peers due to its prudent investment strategy and beneficial geographical positioning.

Further, it has not yet successfully completed its conversion to higher-margin products, nor does its current valuation fully reflect its growth prospects, which we think have further improved in view of China's stimulus package, as also the regulator's decision to allow the insurers to invest directly in the infrastructure projects. Therefore, we maintain our Buy recommendation on the shares.