Investment banks optimistic about China Life despite Q3 profit decline

Tue. November 04, 2008; Posted: 09:23 PM

BEIJING, Nov 04, 2008 (Xinhua via COMTEX) -- LFC | Quote | Chart | News | PowerRating -- Foreign investment banks are quite optimistic about the prospects of China Life Insurance Co., Ltd. (601628.SH; 2628.HK) as Chinese government is pushing forward rural insurance development.

China Life has dominated the country?s rural insurance sector in recent years, and rural market made up half of the company?s insurance business. Its status will be further consolidated with the support of the authority.

Goldman Sachs said in a recent report that a few insurance companies including China Life and China Pacific Insurance (601099.SH) will soon pilot small-sum insurance service in rural areas. Although the profit space for agricultural insurance is comparatively lower than that in cities, once agricultural insurance is kicked off, over 900 million rural population will pose unexhausted sources for premium

. Deutsche Bank gives ?buy? rating to China Life?s H shares, with target price being 34.2 HK dollars. It predicts that China Life will maintain low-risk operation and continue cutting its investment in stocks.

Morgan Stanley thinks China Life will be in step with the market, with target price at 27.35 HK dollars.

China Life?s premium income soared 56.7 percent in the first three quarters of this year, higher than 50.1-percent growth in the first half of the year.

However, its net profit dropped sharply by 46.9 percent to 13.11 billion yuan.The profit decline of China Life is mainly attributable to the deadly Sichuan earthquake in mid-year and the spreading financial crisis.

China Life closed at 20.75 HK dollars Tuesday, down 1.19 percent.

For full details on China Life Insurance Company Limited ADS (LFC) click here. China Life Insurance Company Limited ADS (LFC) has Short Term PowerRatings of 6. Details on China Life Insurance Company Limited ADS (LFC) Short Term PowerRatings is available at This Link.

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