Source: Yan Shushi College By | Xin Tai As the top company in the "Global Insurance Brand Value Top 100", Ping An Insurance (Group) Company of China, Ltd. has officially completed a four-year capital operation loop.

In response to the irrational market decline, the management has assessed that the stock price is significantly below its intrinsic value. To stabilize market expectations, the group has initiated a share repurchase plan.

Cancellation of 100 Million A-Shares On October 20, Ping An (601318) announced that it has completed the registration of capital change and the revision of its Articles of Association.

Specifically, the company canceled 103 million A-shares that were repurchased under the plan initiated in 2021 as of September 3, 2025. Following this cancellation, the company revised related provisions in its Articles of Association regarding its share structure and registered capital, recently completing the registration change with the Shenzhen Market Supervision Administration, which adjusted the registered capital from 18.21 billion yuan to 18.11 billion yuan.

This share cancellation traces back to the A-share repurchase plan initiated in 2021. During that time, influenced by factors such as the slowdown in premium growth in the life insurance sector, the company's stock price fell from 94.6 billion yuan per share at the end of 2020 to 50.3 yuan per share.

Faced with the declining stock price, Ping An's management concluded that the company's value was undervalued by the market. Consequently, in August 2021, they approved the A-share repurchase plan, intending to use between 5 billion and 10 billion yuan of its own funds to repurchase A-shares, capping the repurchase price at 82.56 yuan per share. The repurchase was ultimately completed in August 2022, with a total of 103 million shares acquired at a total expenditure of 5 billion yuan, with an average transaction price of 48.74 yuan per share.

From the completion of the repurchase to the final cancellation, Ping An has achieved a value cycle from "buying back shares to support the stock price during its low period" to "returning value to shareholders through cancellation".

The cancellation of shares directly impacts the company's total share capital contraction. With net profit remaining stable, a reduction in total shares will directly drive improvements in core financial metrics such as Earnings Per Share (EPS).

Relevant calculations indicate that the cancellation reduced the total shares outstanding from 18.21 billion to 18.11 billion, a decrease of 0.55%. Based on a net profit attributable to shareholders of 68.047 billion yuan for the first half of 2025, the EPS is expected to increase by approximately 0.02 yuan, with net asset value per share also increasing by about 0.03 yuan.

Overall, this event demonstrates Ping An's maturity and foresight in capital management. On one hand, the company using "real funds" to repurchase and cancel shares reflects the management's judgment on the current undervaluation of its stock and confidence in its future development; on the other hand, it also showcases the group’s ample cash flow and robust capital strength. The 2025 semi-annual report shows that the group's comprehensive solvency adequacy ratio reached 215.9%, exceeding regulatory requirements, providing intrinsic motivation for this capital operation.

Shift in Investment Strategy The shift is not limited to share repurchase and cancellation. Since 2024, the company has redirected its strategic focus towards low-volatility and high-dividend assets, intensively increasing stakes in Industrial and Commercial Bank of China H, Postal Savings Bank of China H, China Merchants Bank H, and Agricultural Bank of China H. In August, they further increased stakes in China Pacific Insurance H and China Life Insurance H.

According to the latest information disclosed by the Hong Kong Stock Exchange, on October 10, Ping An Life increased its holding of 2.989 million shares in China Merchants Bank H, raising its holding ratio to 17%. On the same day, Ping An acquired 6.416 million shares of Postal Savings Bank H, pushing its holding ratio to 17.01%. Estimates suggest that the company has spent over 100 billion Hong Kong dollars on bank H shares this year.

This stands in sharp contrast to previous investment setbacks in Futu Holdings and China Fortune Land Development. At that time, Ping An had suffered losses exceeding 22 billion yuan from investments in Futu Holdings, with cumulative exposures to China Fortune Land Development reaching approximately 54 billion yuan. This indicates a current portfolio that exhibits clear defensive characteristics.

Moreover, the company's heavy investment in bank and insurance stocks helps to mitigate internal risks within the financial sector, as both banks and insurance companies share similar cyclical characteristics and regulatory environments.

In terms of performance, by the end of June, the group established a pattern of "core driving from Hong Kong stocks, A-shares facing local pressure". In the Hong Kong stock market, HSBC's share price surged nearly 40% this year, bringing about 41.8 billion Hong Kong dollars in floating profits for Ping An; four Hong Kong bank stocks, including China Merchants Bank and Industrial and Commercial Bank of China, yielded a combined floating profit of 29.118 billion Hong Kong dollars, while the insurance segment generated an additional floating profit of 5.611 billion Hong Kong dollars, resulting in total floating profits exceeding 73.5 billion Hong Kong dollars. Meanwhile, the A-share performance was affected by the market, with China Yangtze Power and Beijing-Shanghai High-speed Railway incurring losses of 1.028 billion and 1.514 billion yuan respectively, but Huadian New Energy's IPO brought floating profits of 874 million Hong Kong dollars, partially offsetting losses.

The asset allocation continues to optimize, with the group’s insurance fund investment portfolio exceeding 6.2 trillion yuan by the end of June 2025, a growth of 8.2% from the beginning of the year; the portfolio achieved a non-annualized comprehensive investment return rate of 3.1%, an increase of 0.3% year-on-year.

Notably, in equity-type financial assets, the book value of stocks reached 649.294 billion yuan, accounting for 10.5% of investment assets, an increase of nearly 3 percentage points from the end of 2024, with the book value of stocks growing by over 200 billion yuan.

Additionally, in June 2025, the company announced a plan to issue H-share convertible bonds. Specifically, it plans to issue zero-coupon convertible bonds amounting to 11.765 billion Hong Kong dollars due in 2030, which can be converted into H shares of the company.

For Ping An, this issuance of convertible bonds at a zero interest rate means that the company won't need to pay interest until the bonds are converted to shares, significantly reducing financial costs for the financing.

According to the announcement, the raised funds will be utilized to support core business development focused on finance, particularly in the healthcare and elder care sectors. This indicates that the financing activity is closely tied to the company's long-term strategic direction, injecting momentum for future business growth.

For investors, this also brings varying impacts. The zero-coupon convertible bonds being issued have an initial conversion price set at 55.02 Hong Kong dollars per share, which represents an approximate 18.45% premium over the closing price the day before the announcement. For investors, the attraction lies in potential future conversion gains. If the company's H-share price continues to rise and exceeds the conversion price, choosing to convert will yield considerable profit.

If the stock price does not perform as expected, investors can still hold the bonds until maturity to recoup their principal, providing a degree of downside protection. This "offensive and defensive" characteristic may attract investors seeking stable returns.

Following the distribution of dividends for the year 2024 in June, the company announced again in October its implementation notice for the interim share dividend for 2025. According to the announcement, the interim cash dividend for 2025 is set at 0.95 yuan per share (before tax), totaling approximately 17,202,259,895.25 yuan (before tax), or about 17.202 billion yuan. The record date for the dividend is October 23, with the cash dividend payment date on October 24. Following this dividend distribution, Ping An’s dividend yield reaches 4.45%, ranking first among five A-share listed insurance companies.

As the focus of market attention, Ping An will hold a quarterly performance and operational briefing on October 28 to address questions of widespread concern among investors. We will continue to monitor this event.