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Capturing Opportunities During the Pandemic: ZhongAn's Profit Up 420% in 1H 2020
COVID-19 and China
Image credit: Marek Studzinski/Unsplash

Three years after the initial public offering, the Shanghai-based ZhongAn Online P&C Insurance turned its net income into a positive number in 1H 2020 for the first time. The company's overall revenue went up from CNY 6.9 billion to CNY 8.6 billion year-on-year and the total insurance premium rose by 14.7%, to CNY 6.7 billion. In the first half of 2020, the net profit attributable to shareholders increased by 419.8%, reaching CNY 491. Up to now, the share price of ZhongAn has changed from HKD 29.25 to HKD 37.35 this year, which equals to a 27.7% increase, resulting in the market capitalization to achieve HKD 54.9 billion.

The COVID-19 pandemic accelerated the customers' needs for insurance. People's consciousness towards health insurance advanced after the pandemic gradually became an international issue starting from the beginning of 2020. Captured this opportunity, ZhognAn's health insurance premium climbed up by 115.6% and became its largest business line, contributing 45% of the total premium in 1H 2020. The company also benefited from the increasing demand for online transactions due to lockdowns. ZhongAn has several online platforms including APP, mini-programs and the official website that provide online conversation service and purchase options.

Compared to New China Life (01336:HK), People's Insurance Company of China (01339:HK) and China Life (02628:HK), which all made a progress in revenue but had a reduction in net income ranging from 18% to more than 30% in 1H 2020, ZhongAn proved that its outstanding financial results are the harvest of a decision to make a better business structure.

ANALYST
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