Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We have retained our Outperform recommendation on China Life Insurance Co. Ltd. (LFC - Analyst Report) following impressive first half results. We expect superior brand name, an extensive domestic distribution channel and strong investments of China Life to bolster its operations in the upcoming term. This leading Chinese life insurance company carries a Zacks Rank #2 (Buy).

Why the Reiteration?

China Life’s earnings for the first half of 2013 came in at RMB0.83 per share ($0.13 per ADR), witnessing a surge of 68.1% year over year.

The Zacks Consensus Estimate for 2013 moved up by 0.4% to $2.59 over the last 30 days. The estimate also translates to a year over year increase of 178.5%. Similarly, for 2014, the Zacks Consensus Estimate improved by 0.3% to $2.94 over the same time frame.

With a strong distribution and service network, China Life is well positioned to reap benefits of scale from the Chinese insurance market. In fact China Life became the first Chinese insurance company to obtain a private equity fund license and enter the private equity business in Aug 2011. The private equity business can generate impressive profits if managed properly.

Moreover, the company’s continuous efforts to maintain its huge clientele base through dedicated customer service are expected to help the company write new business going forward.  Additionally, the company’s strong brand name and goodwill has enabled it to achieve success in the new field easily, compared to lesser-known insurance companies.

China Life has also been facilitated by the increased allocation in held-to-maturity securities, bank deposits and a higher volume of policy loans and debt investment plans. As a result, investment income has been increasing over the past few years and is expected to improve further with the improving economic scenario. The Chinese life insurer also scores strongly with the credit rating agencies.

However, China Life’s declining operating cash flow, exposure to domestic market risks and higher than expected benefits and expenses are some of the matters that need attention. Also with the growth in the Chinese insurance market, China Life encounters threats from potential new entrants that must be countered through growth strategies.   

Other Stocks to Consider

Among other life insurance companies that are worth considering are StanCorp Financial Group Inc. (SFG - Analyst Report) carrying a favorable Zacks Rank #1 (Strong Buy) and Health Insurance Innovations Inc. (HIIQ - Snapshot Report) and Lincoln National Corporation (LNC - Analyst Report) sharing the same Zacks Rank as China Life.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%