Ping An Insurance wants to be valued more like a technology company. Its executives have yet to convince investors their planned $22 billion spend on everything from artificial intelligence to blockchain will work.

While Ping An (Group) Co.’s Hong Kong-traded stock has risen 36% since January, it trades at 9.7 times projected earnings over the next 12 months, well below Tencent Holdings Ltd. and Alibaba Group Holding Ltd., both at more than 20.

The insurance and financial firm, which still makes the bulk of its money selling old-school life, health and property and casualty policies, has pinned much upon being able to hand rear, and then spin off, tech unicorns.

Yet online health provider Good Doctor, which Ping An listed in 2018, is losing money and car-buying website Autohome Inc. has shed close to one-quarter of its value since its May peak. Wealth management platform Lufax is stuck in the IPO pipeline amid regulatory changes, and now WeWork’s debacle has cast a pall over the share-sale prospects of fintech unit OneConnect.

Investors shouldn’t be “over excited” about Ping An’s technology push, said Leon Qi, who covers financial companies at Daiwa Capital Markets Hong Kong Ltd. The progress of spinning off tech unicorns is below expectations, he said.

At HK$88 a share, Qi has the lowest target price for Ping An among analysts tracked by Bloomberg. The stock closed Wednesday at HK$93.90.

Such skepticism doesn’t sit well with Co-Chief Executive Officer Lee Yuan Siong.

Ping An’s shares haven’t even begun to reflect the benefits that the company’s internet operations, known as its five ecosystems, have started bringing to the firm’s core financial businesses, Lee said.

Impressive Statistics
“Every part has room” to increase in valuation, he said in an interview from his office in Shenzhen’s Ping An Finance Center, the city’s tallest building from which, on a clear day, Hong Kong is visible in the distance. “Should the smart investor, before it’s reflected, invest first?”

Ping An’s embrace of everything high-tech has produced some impressive statistics. Automotive claims can be settled online in under three minutes; chatbots answer callers’ inquiries with 95% accuracy; delivering insurance policies electronically saves 310 million sheets of paper a year.

The firm has plowed $7 billion to date into technology and R&D and plans another $15 billion over the next decade. It’s spun off 10 tech startups, based around those five ecosystems in financial services, health care, real estate, automobile, and smart city, or government, services.

The strategy itself is not hard to understand. Technology can improve Ping An’s main life, health insurance and financial-services businesses, and generate additional value for those areas, by helping to acquire new customers and lower costs with more accurate pricing. Ping An’s tech products can also bring in revenue streams of their own if sold to third parties, while the startups, once listed, can create additional shareholder wealth.

It’s an approach that’s helped Ping An deliver faster new business value growth than its peers, as well as profitability at its property-insurance arm that’s 3 percentage points above the industry average…


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