Your discussion of the convoluted history of LFC is very illuminating. ...
Suggestion by Irakrakow on 2008-01-10 21:13:10
Your discussion of the convoluted history of LFC is very illuminating. It is difficult to know how, in an authoritarian regime such as China, how great the state control of LFC is. As the largest insurance company in China, there's certainly plenty of growth. However, this growth - and more - may be already priced into the stock, as LFC trades at 6 times its growth rate and a forward P/E of 32, compared to the US average PE for an insurance company of 8.
Perhaps you could go into more detail on China Life's acquisitions. Ping An invested $2.7 billion deal for a 4.2% stake in the Dutch bank Fortis. China Life, in response, is rumored to buy a strategic stake in a Japanese insurance company. Is LFC a proxy for the Chinese state? The stock price, which was as high as 106 last year, has retreated to 75. As an investment, LFC carries much risk, especially if the Shanghai stock market collapses. To reinforce this fear, LFC executives have stated that they will lighten their investment in Chinese stocks.
Sources:
http://seekingalpha.com/article/47323-earnings-quality-issues-for-nyse-china-listings
http://stockerblog.blogspot.com/2007/10/china-stocks-more-than-just-baidu.html
http://www.seekingalpha.com/article/55681-china-life-moving-away-from-chinese-equities
http://www.bloggingstocks.com/2007/08/23/china-life-lfc-gets-a-boost-from-record-profits/
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