AIA Group (1299.HK / 1299 HK) Source: Company data, Thomson Reuters, Credit Suisse estimates.

Transcription

1 Asia Pacific/Hong Kong Equity Research Life Insurance (Financials) Share price performance Rating NEUTRAL* [V] Price (4 Jan 11, HK$) Target price (HK$) 23.5¹ Chg to TP (%) 4.2 Market cap. (US$ mn) 34,957 (US$ 34,957) Enterprise value (US$ mn) 32,92 Number of shares (mn) 12,44. Free float (%) 52week price range *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. [V] = Stock considered volatile (see Disclosure Appendix). Oct1 Price (LHS) Research Analysts Arjan van Veen arjan.vanveen@creditsuisse.com Frances Feng frances.feng@creditsuisse.com Paul Lloyd paul.lloyd@creditsuisse.com Rebased Rel (RHS) The price relative chart measures performance against the HANG SENG index which closed at on 4/1/11 On 4/1/11 the spot exchange rate was HK$7.77/US$1 12 Performance 1M 3M 12M Absolute Over (%).22 Relative (%) (1299.HK / 1299 HK) QUARTERLY HK 3Q1 trends: a weaker quarter for Event: The Hong Kong Office of the Commissioner of Insurance (OCI) has released data for the life insurance market for the quarter ending 3 September 21 (3Q1), noting that around 4% of s earnings come from HK. 1) Market growth remains strong in 3Q1 (+1 on pcp), with industry inforce premiums up to HK$135 bn in 3Q1 the third consecutive quarter of >12. growth. New business premiums were up 52% on pcp, the second quarter with sales volumes above prefinancial crisis levels. 2) Traditional product (higher margin) growth stronger, with inforce premiums up 2% on pcp and new sales up 62% on pcp. Due to investor sentiment, unitlinked sales remain less strong, up 11% on pcp. 3) lost market share in 3Q1, with growth of + on pcp, although growth was robust (+11%) in highermargin traditional products. Investment case: The data reiterates our view that HK is not as low growth as most investors believe having grown at 1 p.a. on average for the last decade. In addition, is focusing on incremental profit growth through: 1) increasing penetration of highmargin riders, 2) improving productivity of sales force, 3) improving bancassurance contribution and 4) leveraging direct marketing and group insurance expertise regionally. However, we caution investors not to expect too much too soon, as: 1) is still in a turnaround stage, 2) initiatives will take time to implement and 3) the earnings impact will take some time to emerge. Catalysts: FY1 results in late February 211. Valuation: We derive our HK$ month forward valuation using a sumoftheparts approach, taking into account the growth and margin profile of each country. Our valuation implies 17x FY11E P/E, 1.9x book value, 1.4x embedded value and 14x implied value of oneyear new business multiplier. Financial and valuation metrics Year 11/9A 11/1E 11/11E 11/12E Total GPW (US$ mn) Net income (US$ mn) 1,754. 2, , ,517. EPS (CS adj.) (US$) Change from previous EPS n.a. (%) Consensus EPS (US$) n.a EPS growth (%) P/E (x) NAV per share (US$) Emb.val.PS Dividend yield (%) P/B (x) ROE Combined ratio (%) Source: Company data, Thomson Reuters, Credit Suisse estimates. DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NONUS ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 HK 3Q1 market share trends The Hong Kong Office of the Commissioner of Insurance (OCI) has released the life insurance market data for the third quarter of 21. We highlight that Hong Kong is currently the single most important market for ; representing 42% of its 1H1 operating profit, more than double the next largest markets of Singapore (17%) and Thailand (16%). Figure 1: HK represents 42% of NPAT operating profit by country 1H1 (%) Figure 2: but only 2 of premiums premium (API) by country 1H1 (%) China 4.4% Malaysia 6.9% Other markets 8.9% Korea 4.2% Hong Kong 42.3% Korea 1 Other markets 12% Hong Kong 2 Singapore 17.1% Thailand 16.3% China 9% Malaysia 6% Singapore 13% Thailand 2% We highlight that the OCI data can often have definitional (product and geographical) issues (i.e., different companies using differing definitions), but the data does good granularity and highlights market trends well. Key trends observed over 3Q1 are as follows: 1) Market growth remains strong in 3Q1 (+1 on pcp), with industry inforce premiums up to HK$135 bn in 3Q1 the third consecutive quarter of >12. growth. New business premiums were up 52% on pcp, the second quarter with sales volumes above prefinancial crisis levels. 2) Traditional product (higher margin) growth was stronger, with inforce premiums up 2% on pcp and new business sales up 62% on pcp. Due to investor sentiment, unitlinked sales remain less strong, up 11% on pcp, but new business sales were up 31% on pcp. 3) lost market share in 3Q1, with growth of + on pcp, although growth was robust (+11%) in highermargin traditional products. Figure 3: HK market growth back to around 1 in 21 HK inforce premiums (API HK$mn) 15, 25.% Figure 4: with new business sales at alltime highs HK new business premiums (API HK$mn) 35, 6% Inforce Premiums (HK$m) 135, 12, 15, 9, 75, 6, 45, 4yr CAGR 11.6% % Growth (% p.a.) New Business Premiums (HK$m) 3, 25, 2, 15, 1, 4 3% 1 % 1 Growth (% p.a.) 3, 5.% 5, 3% 15, 2. Mar6 Jun6 Sep6 Dec6 Mar7 Jun7 Sep7 Dec7 Mar8 Jun8 Sep8 Dec8 Mar9 Jun9 Sep9 Dec9 Mar1 Jun1 Sep1.% Mar6 Jun6 Sep6 Dec6 Mar7 Jun7 Sep7 Dec7 Mar8 Jun8 Sep8 Dec8 Mar9 Jun9 Sep9 Dec9 Mar1 Jun1 Sep1 4 Individual Life NonLinked Individual Life Linked Group Retirement Group Risk Growth (% p.a.) Indiv idual Life NonLinked Indiv idual Life Linked Grow th (% p.a.) (1299.HK / 1299 HK) 2

3 HK key operational trends 3Q1 Figure 5: remains #1 in Hong Kong HK inforce premiums (API HK$mn) 25, Figure 6: but #5 in terms of new business HK new business premiums (API HK$mn) 7, 2, 15.% 12.7% 12.6% 6, 5, 17.7% 13.6% 15, % 8.7% 4, 1.2% 1, 5.4% 3, % % 5, % 2.7% 4.9% 3.6% 3.2% 1, HSBC Manulife AXA Prudential Hang Seng BOC China Life Zurich ING Other Ind Life (NonLinked) Ind Life (Linked) Group Retirement Group Risk HSBC Manulife AXA Prudential Hang Seng BOC China Life Zurich ING Other Ind Life (NonLinked) Ind Life (Linked) Figure 7: slowly losing market share inforce premiums (API HK$mn) and market share (%) 25, 25.% Figure 8: and market share of new business falling new business premiums (API HK$mn) and market share (%) 4,5 18.% Inforce Premiums (HK$m) 2, 15, 1, 5, 15.% 5.% Market share (%) New Business Premiums (HK$m) 4, 3,5 3, 2,5 1,5 1, 16.% 14.% 12.% 8.% 6.% 4.% Market share (%) 5 2.% Mar6 Jun6 Sep6 Dec6 Mar7 Jun7 Sep7 Dec7 Mar8 Jun8 Sep8 Dec8 Mar9 Jun9 Sep9 Dec9 Mar1 Jun1 Sep1.% Mar6 Jun6 Sep6 Dec6 Mar7 Jun7 Sep7 Dec7 Mar8 Jun8 Sep8 Dec8 Mar9 Jun9 Sep9 Dec9 Mar1 Jun1 Sep1.% Individual Life NonLinked Individual Life Linked Group Retirement Group Risk Market share Individual Life NonLinked Individual Life Linked Market share Figure 9: HK market growth 11year average 15.2% pa HK inforce premiums (HK$mn) and market growth (%pa) 15, 3% Figure 1: with lagging market since AIG events new business premiums (API HK$mn) and market share (%) 25.% Inforce Premiums (HK$m) 125, 1, 75, 5, 11yr CAGR = 15.2%pa 2 2% 1 1% Growth (% p.a.) 15.% 5.%.% 5.% Market avg 25, 15.% % Sep2 Mar3 Sep3 Mar4 Sep4 Mar5 Sep5 Mar6 Sep6 Mar7 Sep7 Mar8 Sep8 Mar9 Sep9 Mar1 Sep1 Individual Life NonLinked Individual Life Linked Group Retirement Group Risk Growth (% p.a.) Market 8yr CAGR (%pa) (1299.HK / 1299 HK) 3

4 HK key operational trends 3Q1 (cont d) Figure 11: Traditional growth at around 2% in 3Q1 HK inforce traditional (nonlinked) premiums (API HK$mn) Figure 12: with unitlinked growth weaker at 11% HK inforce unitlinked premiums (API HK$mn) 1, 2 35, 3 9, 8, 2% 3, 3% Inforce Premiums (HK$m) 7, 6, 5, 4, 3, 3yr CAGR 12% 1 1% Growth (% p.a.) Inforce Premiums (HK$m) 25, 2, 15, 1, 3yr CAGR 18% 2 2% 1 1% Growth (% p.a.) 2, 1, 5, % % Sep1 Jun1 Mar1 Dec9 Sep9 Jun9 Mar9 Dec8 Sep8 Jun8 Mar8 Dec7 Sep7 Jun7 Mar7 Dec6 Sep6 Jun6 Mar6 Sep1 Jun1 Mar1 Dec9 Sep9 Jun9 Mar9 Dec8 Sep8 Jun8 Mar8 Dec7 Sep7 Jun7 Mar7 Dec6 Sep6 Jun6 Mar6 Individual Life NonLinked Growth (% p.a.) Individual Life Linked Growth (% p.a.) Figure 13: traditional market share up in 3Q1 inforce traditional (nonlinked) premiums and market share (%) Figure 14: with unitlinked growth weaker at 11% inforce unitlinked premiums ( HK$mn) and market share (%) 14, 2% 1, 4% Inforce Premiums (HK$m) 1 1, 8, 6, 4, 18% 16% 14% 12% 1% 8% 6% 4% 2% Market share (%) Inforce Premiums (HK$m) 9, 8, 7, 6, 5, 4, 3, 1, 3 3% 2 2% 1 1% Market share (%) % % Aug1 Jun1 Apr1 Feb1 Dec9 Oct9 Aug9 Jun9 Apr9 Feb9 Dec8 Oct8 Aug8 Jun8 Apr8 Feb8 Dec7 Oct7 Aug7 Jun7 Apr7 Feb7 Dec6 Oct6 Aug6 Jun6 Sep1 Jun1 Mar1 Dec9 Sep9 Jun9 Mar9 Dec8 Sep8 Jun8 Mar8 Dec7 Sep7 Jun7 Mar7 Dec6 Sep6 Jun6 Mar6 Individual Life NonLinked Market share (%) Figure 15: nonlinked volumes improving NB traditional (nonlinked) premiums and market share (%) Individual Life Linked Market share (%) Figure 16: but unitlinked remains very weak NB unitlinked premiums ( HK$mn) and market share (%) 2,5 14% 4, 3 New Business Premiums (HK$m) 1,5 1, 5 12% 1% 8% 6% 4% 2% Market share (%) New Business Premiums (HK$m) 3,5 3, 2,5 1,5 1, 5 3% 2 2% 1 1% Market share (%) % % Sep1 Jun1 Mar1 Dec9 Sep9 Jun9 Mar9 Dec8 Sep8 Jun8 Mar8 Dec7 Sep7 Jun7 Mar7 Dec6 Sep6 Jun6 Mar6 Dec5 Sep1 Jun1 Mar1 Dec9 Sep9 Jun9 Mar9 Dec8 Sep8 Jun8 Mar8 Dec7 Sep7 Jun7 Mar7 Dec6 Sep6 Jun6 Mar6 Dec5 Individual Life NonLinked Market share (%) Individual Life Linked Market share (%) (1299.HK / 1299 HK) 4

5 Product mix Hong Kong operations remain a dominant source of earnings for, likely continuing to contribute >4% of operating margins for FY11E, with traditional (nonlinked) products accounting for around of premiums. Figure 17: Traditional policies around of new business HK product mix new business premiums (API % 1H1) Figure 18:...but riders a key value driver HK product mix value of new business (% 1H1) Standalone A&H 4% Group 4% Riders 7% Riders 26% Ordinary individual life 52% Group Ordinary individual life 47% Investmentlinked 33% Standalone A&H 9% Investmentlinked 13% is seeking to improve its profit margins and revenue growth mainly through: 1) increasing penetration of highmargin riders, 2) improving productivity of sales force, 3) improving bancassurance contribution and 4) leveraging direct marketing and group insurance expertise regionally. Distribution mix s business model in HK remains highly skewed to its agency business, with AXA and Prudential more diversified in terms of their distribution footprints (Figure 19): Figure 19: Channel distribution mix by individual life new business (top 6 competitors) Source: AXA strategy briefing presentation, 1 Dec 29 (AXA mix left had circle) (1299.HK / 1299 HK) 5

6 HSBC and Hang Seng have been among the highest growth companies in the HK market over the last decade, but we note their mix is skewed more toward investment than life insurance. market positioning in key regional markets Figure 2: #1 position in Hong Kong Market share by company (%) 26, 28, 21 2 Figure 21: with clear #1 in Thailand Market share by company (%) 25, 27, 29 5.% 2% 4.% 1 3.% 1% % HSBC Hang Seng Prudential AXA Manulife BOC China Life.% Thai Life Bangkok Life Muang Thai Siam Comm NY Life Ayudhya Allianz Krungthai AXA Ocean Life ING Other Jun6 Jun8 Jun Figure 22: #1 in Singapore Market share by company (%) 25, 27, 29 3.% Figure 23: and #3 in Malaysia Market share by company (%) 25, 27, % 25.% 15.% 5.% 3.% 25.% 15.% 5.%.% Great Prudential NTUC Aviva Manulife OAC TM Asia HSBC Other Eastern.% Great Prudential ING Hong Eastern Leong MAA Allianz MCIS Zurich Manulife Other Figure 24: #1 in Korea Market share by company (%) 25, 27, Figure 25: and largest foreign insurer in China Market share by company (%) 25, 27, 29 5.% 3% 2 2% 4.% 3.% 1 1% % Samsung Korea Kyobo ING Shinhan Mirae Asset TongYang Hungkuk Allianz AIG Other FY6 FY8 Aug1.% China Life Ping An New China Life China Pacific Tai Kang Life Dec6 Dec8 Sep1 PICC Life Tai Ping Others Source for all charts: Local regulators, Company data, Credit Suisse estimates (1299.HK / 1299 HK) 6

7 Thailand (2% of 1H1 premiums/16% of NPAT) Figure 26: #1 position in Thailand Thailand APE (THB mn) and market share (%) 29 Figure 27: and #1 in terms of new business Thailand NB APE (THB mn) and market share (%) 29 9, 8, 35.6% 16, 14, 23.9% 7, 1 6, 5, 4, 3, 2, 1, 13.6% 8.% 8.% 8.% 6.6% 4.9% 4.6% 3.3% 7. 1, 8, 6, 4, % 1.3% 11.% 7.2% 8.1% 4.1% 3.9% 1.7% Thai Life Bangkok Life Muang Thai Siam Comm NY Life Ayudhya Allianz Krungthai AXA Ocean Life Renewal premium FYP 1% single premium ING Other Thai Life Bangkok Life FYP Muang Thai Siam Comm NY Life Ayudhya Allianz Krungthai AXA 1% single premium Ocean Life ING Other Figure 28: Market growth averaging around 1 p.a. Thailand inforce life premiums (THB mn) , 2, 15, 1, 7.6% 12.4% 7.7% 11.9% 12.9% 18.6% Growth (%pa) 2.9% 17.% % Figure 29: with growth not fully recovered Thailand life market / growth (%pa) 25.% 15.% Av erage Thai Market 5, 5.% % Renewal premium FYP 1% single premium Figure 3: Thai new business CAGR 16% Thailand life new business premiums (THB mn) , 6, 32.1% Figure 31: with share of new business reducing New business market share (%) 6.% 5.% 5, 4, 3, 2, Growth (%pa) 19.9% 17.1% 25.2% 1.4% 4.4% 5.6% 33.7% 1.7% 4.% 3.% Thai Life 1, Bangkok Life % Muang Thai FYP 1% single premium Thai Life Bangkok Life Muang Thai Source for all charts: TLAA, OIC, Company data, Credit Suisse estimates (1299.HK / 1299 HK) 7

8 Singapore (13% of 1H1 premiums/17% of NPAT) Figure 32: #1 position in Singapore Singapore life premiums (S$ mn) and market share (%) 29 2,5 1,5 24.9% 18.3% 17.3% 16.1% Figure 33: but #4 in terms of new business New business premiums (S$ mn) and market share (%) % 17.9% 17.9% 18.6% 13.% 1, 5 5.9% 4.4% 4.3% 2.% 2.% 4.9% % 6.1% 4.1% 2.3% 4.% Great Prudential NTUC Aviva Manulife OAC TM Asia HSBC Other Eastern Great Prudential NTUC Aviva Manulife OAC TM Asia HSBC Other Eastern Ordinary Unitlinked Group Annual premium 1% single premium Figure 34: Market growth averaging around 7. p.a. Singapore quarterly life premiums (S$ mn) , 9, 8, 7, 6, 5, 4, 3, 1, Sep4 5yr CAGR = 7.3%pa Mar5 Sep5 Mar6 Sep6 Mar7 Sep7 Mar8 Sep8 Nonlinked Nonlinked Group Figure 36: growth below system inforce premiums (S$mn) and market share (%) 3, Mar9 Sep9 Mar1 Sep1 35.% Figure 35: but growth higher in 278 Singapore annual life premiums (S$ mn) , 9, 8, 7, 6, 5, 4, 3, 1, Growth (%pa) 7.4% 1.6% 1.8% 2.2% Ordinary Unitlinked Group Figure 37: and slowly losing market share Market share (%) by company 35.% 2,5 Growth 1.4% 5.2% 12.9% 5.3% 3.% 25.% 3.% 25.% Great Eastern 1,5 Prudential 1, 15.% 15.% NTUC 5 5.% %.% Nonlinked Unitlinked Market share (%) Great Eastern Prudential NTUC Source for all charts: MAS, LIA, Company data, Credit Suisse estimates (1299.HK / 1299 HK) 8

9 Malaysia (6% of 1H1 premiums/7% of NPAT) Figure 38: #3 position in Malaysia Malaysia life premiums (MYR mn) and market share (%) 29 4,5 4, 27. Figure 39: but #7 in terms of new business New business premiums (MYR mn) and market share (%) 29 4,5 4, 27. 3,5 3, 17.7% 3,5 3, 17.7% 2,5 12.8% 1.7% 11.8% 2,5 12.8% 1.7% 11.8% 1,5 1, % 3.9% 2.7% 2.3% 1,5 1, % 3.9% 2.7% 2.3% Great Prudential ING Hong Eastern Leong MAA Allianz MCIS Zurich Manulife Other Great Prudential ING Hong Eastern Leong MAA Allianz MCIS Zurich Manulife Other Nonlinked Unitlinked Group Figure 4: Market growth averaging around 12. pa Malaysia quarterly life premiums (MYR mn) , 16, 14, 1 1, 8, 6, 4, Growth (%pa) 11.9% 25.4% 8.8% % Nonlinked Unitlinked Group Figure 41: driven by linked sales (28% growth p.a.) Malaysia linked premiums (MYR mn) , 5, 4, 3, 1, Growth (%pa) 41.4% 63.8% 25.2% 13.9% 4.2% Nonlinked Unitlinked Group Annual premium 1% single premium Figure 42: growth below system inforce premiums (MYR mn) and market share (%) 2,5 17. Figure 43: and slowly losing market share Market share (%) by company 35.% Growth 7.8% 13.7% 3.3% 4.8% 4.% 15.% 3.% 25.% Great Eastern 1,5 12. Prudential 1, 15.% % ING %.% Nonlinked Unitlinked Group Market share (%) Great Eastern Prudential ING Source for all charts: LIAM, Bank Negara Malaysia, Company data, Credit Suisse estimates (1299.HK / 1299 HK) 9

10 key financials Income statement Figure 44: income statement US$mn FY7 FY8 FY9 FY1E FY11E FY12E Growth (%pa) Income statement Nov7 Nov8 Nov9 Nov1 Nov11 Nov12 FY9 FY1E FY11E FY12E Net premiums and fee income 8,817 1,361 1,173 11,37 12,88 14,584 2% 11% 14% 13% Investment income 2,76 3,144 3,59 3,46 3,833 4,33 3% 13% 11% 12% Total revenue 11,523 13,55 13,232 14,768 16,714 18,887 2% 12% 13% 13% Net insurance and inv benefits 7,636 8,74 8,678 9,783 11,16 12,551 % 13% 14% 13% Commission / acqu. expenses 947 1,563 1,648 1,482 1,727 1,946 1% 17% 13% Operating expenses 962 1, ,129 1,19 1,257 1% 1 6% Inv mgmnt exp / finance costs % 27% % % Total expenses 9,831 11,68 11,43 12,484 14,113 15,844 2% 9% 13% 12% Associates and joint ventures % 19% 4% Pretax operating profit 1,692 1,869 1,781 2,268 2,588 3,35 27% 14% 17% Tax on operating profit % 23% 4% 18% Noncontrolling interest % 1% % % Normalised NPAT 1,27 1,588 1,438 1,842 2,146 2, % 28.1% % Pretax operating profit 1,692 1,869 1,781 2,268 2,588 3,35 27% 14% 17% Nonoperating items 887 1, Profit/(loss) before tax 2, ,411 2,572 2,588 3,35 7% 1% 17% Tax (expense)/credit % 36% 4% 18% Noncontrolling interests % 233% % % Reported NPAT 1, ,754 2,146 2,146 2,517 33% 22% % 17% Divisional normalised NPAT Hong Kong ,7 1 28% 12% 1 Thailand % 22% 1% 14% Singapore % 1 21% 16% Malaysia % 18% China % 21% 42% 37% Korea % 129% 7% 13% Other markets % 19% 19% 3% Corporate % 8% 48% 2% Operating NPAT 1,27 1,588 1,438 1,842 2,146 2, % 28.1% % Reported EPS (USD) % 22% % 17% Normalised EPS (USD) % 28% 17% 17% Normalised EPS (HKD) % 28% 17% 17% EPS growth (%) % 79% 33% 22% % 17% PE (x) 27.1x 21.8x 24.x 18.7x 16.1x 13.7x Dividend per share (USD)..5.6 na na 17% DPS growth (%) na na 17% Net dividend yield (%annualised).%.%.%.% 1.9% 2.2% Payout ratio (%) % % % % 3% 3% (1299.HK / 1299 HK) 1

11 Key operating ratios Figure 45: key operating ratios Growth (%pa) Operating ratios FY7 FY8 FY9 FY1E FY11E FY12E FY9 FY1E FY11E FY12E TWPI weighted premiums 11,358 12,23 11,632 13,221 15,1 16,99 4.7% 13.7% % Growth (% p.a.) 7.4% 4.7% 13.7% % Hong Kong 2,845 2,916 2,861 3,34 3,338 3, % 6.1% 12. Thailand 2,164 2,351 2,373 2,751 3,156 3,55.9% 15.9% 14.7% 12. Singapore 1,514 1,641 1,524 1,724 1,936 2,13 7.1% 13.1% 12.3% Malaysia ,82 2.8% 17.1% 16.2% 12. China ,18 1,15 1,323 1,521 9.% 13.% 15.% 15.% Korea 2,178 2,268 1,759 2,61 2,343 2, % 17.2% 13.7% 12. Other markets 1,184 1,366 1,39 1,673 1,943 2, % 2.4% 16.1% 15.% Annual new business (ANP) 1,878 1,923 2,142 2, % 11.4% 9.% as % of TWPI 16% 1 14% 14% 2% % % Reinsurance ratio 22.4% 15.1% % 13.8% 2.6% 1.9%.3%.4% Investment income 3.8% 5.% 4.7% 4.4% 4.3% 4.2%.2%.4%.1%.% Benefit ratio 86.6% 84.% 85.3% % 86.1% 1.3% 1.2%.3%.2% Commission ratio 8.3% 12.8% 14.2% 11.2% % 3.%.3%.% Expense ratio % 8.4% % 7.4%..1%.6%. Operating margin (pretax) 14.9% 15.3% 15.3% 17.2% 17.3% 18.%.% 1.8%.1%.7% Operating margin (posttax) 11.2% 13.% 12.4% 13.9% 14.3% 14.9%.7% 1.6%.4%.6% Operating tax rate 24.3% 14.7% 19.% 18.4% 16.7% 16.7% 4.3%.6% 1.7%.1% Return on equity (%pa) 9.4% 14.1% 12.% 11.3% 11.7% 12.6% Figure 46: China operating ratio highest Operating expense ratio (% TWPI) Figure 47: with HK operating margin best Operating expense margin (%) 35.% % Operating expenses (%) 15.% Operating margin (%) posttax 25.% 15.% 5.% 5.% 2..% Hong Kong Thailand Singapore Malaysia China Korea Other markets 1H9 2H9 1H1.% Hong Kong Thailand Singapore Malaysia China Korea Other markets 1H9 2H9 1H1 (1299.HK / 1299 HK) 11

12 Balance sheet and solvency position Figure 48: balance sheet Growth (%pa) Balance sheet FY7 FY8 FY9 FY1E FY11E FY12E FY9 FY1E FY11E FY12E Cash 2,583 4,164 3,45 3,389 3,558 4,133 18% % 16% Investments 7,63 55,324 73,48 84,14 95,322 17,448 33% 14% 13% 13% Investment property % 1% % % Investment in JVs % 19% % % Deferred acquisition costs 1,44 1,47 1,976 11,833 13,21 14,626 9% 8% 12% 11% Reinsurance assets 2, % 61% % % Property, plant & equipment % 7% % % Intangible assets % 4% % % Other assets 1,462 1,499 1,658 1,663 1,663 1,663 11% % % % Total Assets 88,192 72,9 9,659 12, ,57 129,184 26% 13% 13% 12% Insurance contract liabilities 57,161 52,158 63,255 7,57 8,68 9,254 21% 12% 13% 13% Investment contract liabilities 6,55 4,898 7,78 8,595 9,752 1,993 59% 1% 13% 13% Derivative financial instruments % 6% % % Securities lending / repos 5,395 2, % 136% % % Provisions % 2 % % Current tax liabilities % % % Borrowings 1, % 1% % % Deferred tax liabilities 1, ,87 1,373 1,373 1,373 99% 26% % % Other liabilities 2,294 1,587 2,7 2,242 2,93 3,868 3% 8% 31% 32% Total Liabilities 74,71 63,91 75,7 84,662 96,5 18,37 2% 12% 13% 13% Net assets 13,491 8,918 14,959 17,55 19,52 2,814 68% 17% 9% 9% Minority interests % 18% % % Shareholders' Equity 13,44 8,98 14,98 17,49 18,992 2,754 67% 17% 9% 9% Net tangible assets 13,24 8,676 14,675 17,248 18,75 2,512 69% 18% 9% 9% Inadmissible assets (incl DAC) 1,689 5,925 9,864 11,833 13,21 14,626 66% 2% 12% 11% Regulatory capital held 2,551 2,751 4,811 5,415 5,549 5, % 2% 6% Min capital required (MCR) 1,357 1,316 1,547 1,785 2,25 2,283 18% 1 13% 13% Solvency ratio (%) 188% 29% 311% 33% 274% 258% 49% 2% 1% 6% Excess capital 1,194 1,435 3,264 3,629 3,524 3,62 127% 11% 3% 2% Excess capital per share Book value p/share (HK$) % % 9.2% P/B (x) 2.5x 3.9x 2.3x 2.x 1.8x 1.7x Return on equity (% p.a.) 9.4% 14.1% 12.% 11.3% 11.7% 12.6% 2.1%.7%.4%.9% Return on assets (%) 1.6% 2.% 1.8% 1.9% 2.% 2.1%.2%.1%.1%.1% NTA p/share (HK$) % 17.8% 8.7% 9.4% P/NTA (x) 2.6x 4.x 2.4x 2.x 1.8x 1.7x Return on NTA (% p.a.) 9.6% % % 12.8% 2.1%.8%.4%.9% Embedded value (p/share HK$) % 11.1% 9.6% P / EV (x) 1.6x 1.5x 1.33x 1.2x Return on EV (%pa) 6.9% 8.3% 8.7% 9.3% Value 1yr nb (p/share HK$) % 9.6% Implied VNB multiplier (x) 17.9x 11.6x 7.6x (1299.HK / 1299 HK) 12

13 Group valuation summary Our 12month forward sumoftheparts valuation/target price of is HK$23.5 (US$36.3 bn), which implies 1.4x price to embedded value (FY11E), 17x P/E and 1.9x pricetobook value and 14x implied value of new business multiplier. In establishing this range, we have considered s earnings value growth outlook on a bottomup basis and compared this with listed life insurance peers in China (1.62.6x), Australia (.8x1.6x) and Europe (.5x1.2x) We have valued employing a sumoftheparts approach, applying a new business multiplier to each country s value of new business plus embedded value depending on the growth outlook in each country. We have sense checked the results relative to price to earnings and price to book, as highlighted below: Figure 49: Credit Suisse sumoftheparts valuation summary (FY11E) In US$mn unless otherwise stated Valuation Earnings PE (x) Alloc Equity NAV P/NAV ROE Net worth EV P/EV VNB Assumption US$ mn FY11F FY12F FY11F FY12F US$ mn US$ mn (x) (%) US$ mn US$ mn (x) US$ mn Hong Kong 14, ,7 15.x 13.1x 5,667 6, x 14.9% 5,28 11, x x VNB multiplier Thailand 8, x 22.1x 3,64 4, x 7.2% 3,981 5, x x VNB multiplier Singapore 5, x 12.2x 2,122 2, x 15.3% 1,82 3, x x VNB multiplier Malaysia 1, x 14.5x x 16.8% 562 1,64 1.8x x VNB multiplier China 2, x 15.5x x 12.9% 419 1, x x VNB multiplier Korea 2, x 14.2x 1,479 1, x 1.1% 848 1,74 1.3x 94 5.x VNB multiplier Other markets 3, x 15.x 1,532 2,33 1.9x 9. 1,679 2,54 1.5x x VNB multiplier Corporate / other 1, x 26.5x x 6.9% 5,72 1,63 1.x 93 1.x EV multiple Minorities x 12.x x 16.7% 2.x NAV multiple group 36,332 2,146 2, x 14.4x 16,572 18, x 11.3% 9,264 25, x x Shares on issue 12,36 12,36 12,36 per share (USD) USD:HKD per share (HK$) $ $ 1.38 $ x 14.4x $ 1.69 $ x $ 5.98 $ x 14.1x Figure 5: HK, Thailand and S pore 7% of value CS valuation composition (% total) Figure 51: similar to mix of earnings profit composition (% total FY11E) China 7% Malaysia Korea 7% Other markets 1% Hong Kong 36% Malaysia Korea 6% China Other markets 11% Hong Kong 42% Singapore 14% Thailand 21% Singapore 16% Thailand 1 Source: Credit Suisse estimates (1299.HK / 1299 HK) 13

14 Valuation against peers The figures below highlight the difficulty in determining a correct multiple for with a wide spread of valuations among Asian insurance stocks, ranging from the high multiples attached to the faster growing Chinese life insurance sector to the relatively low multiples attached to insurers in the more mature Korean and Taiwanese markets (which have historical guaranteed product portfolios with negative spreads). Figure 52: P/EV comparison (12month forward) Price to embedded value (x) 3.x Figure 53: VNB multiple (12month forward) Implied value of 1yr new business multiplier (x) 3.x 2.5x 25.x 2.x 2.x 1.5x 15.x 1.x 1.x.5x 5.x.x.x Dongbu Samsung Life Samsung F&M Cathay FHC Great Eastern Tower Aust Shin Kong FHC China Pacific* Fubon FHC Ping An* AMP AXA Asia Pacific China Life* China Pacific Ping An China Life China Taiping LIG Insurance Meritz F&M Tower NZ Manulife Tong Yang Life Hyundai M&F Prudential plc Korea Life Dongbu Samsung Life Cathay FHC Samsung F&M Tower Aust Fubon FHC AMP Shin Kong FHC AXA Asia Pacific China Pacific China Life China Taiping Ping An At the higher end of the regional comps are the fast growing Chinese counterparts, where market growth has averaged over 2% p.a. over the last decade. We deem AXA AsiaPacific the most relevant comparative, but note that its price to embedded value is now substantially higher than its historical range given the combined bid by AXA SA and AMP. Figure 54: Price to embedded value (x) vs return on EV (% p.a.) 3.x Expensive 2.5x China Taiping Ping An China Life Price / Embedded Value (P / EV x) 2.x 1.5x 1.x.5x Cathay FHC AXA Asia Pacific China Pacific Shin Kong FHC AMP Samsung F&M Samsung Life Korea Life Fubon FHC Tower Aust Dongbu Manulife Tower NZ Hyundai M&F Tong Yang Life Meritz F&M LIG Insurance Prudential plc Inexpensive.x 2. 5.% % Return on EV (EPS / EV %) Source: Reuters, Company data, Credit Suisse estimates (1299.HK / 1299 HK) 14

15 Global life insurance comparatives Figure 55: Global life insurers key metrics Reporting Market Monthly Monthly Price 52 Week 12mth 12mth Inv'ment Year Consensus PE (x) EPS Growth P / BV (x) ROE (%pa) P / EV (x) Div Yld (%pa) Company Currency Cap Volume Liquidity 5Jan high/low Target Return Rating End PE (x)* 12mth forward diluted (Credit Suisse forecasts) US$m US$m % local local % Australia & NZ AMP.AX AMP AUD AUD 1, % % NTRL 31Dec 12.7x 13.2x 2.2% 3.3x 25.% 1.4x 6.1% AXA.AX AXA Asia Pacific AUD AUD 13, % % NTRL 31Dec 19.9x 21.2x 22.3% 2.7x 12.6% 1.6x 3.4% TAL.AX Tower Aust AUD AUD 1, % NTRL 3Sep 13.1x 11.8x 25.6% 1.7x 13.% 1.1x 1.7% 26,124 1, % 13.9x 14.1x 1.3% 2.2x 15.4% 1.2x 4.% China & HK 1299.HK USD HKD 34,782 1,55 4.3% % NTRL 3Nov 15.3x 15.9x 1.7% 1.8x 11.4% 1.3x 1.9% 945.HK Manulife CAD HKD 3, % na na NR 31Dec 1.3x 1.3x 1.2x 11.3%.7x 3.% 2378.HK Prudential plc GBP HKD 26,64 3.% % OPFM 31Dec 13.3x 6.7x 8.2% 2.3x 22.7%.9x.% 2628.HK China Life CNY HKD 118,248 4, % NTRL 31Dec 19.3x 19.x 16.6% 3.3x 17.1% 2.2x 3.2% 261.HK China Pacific CNY HKD 35, % % OPFM 31Dec 23.3x 18.6x 32.3% 2.6x 13.9% 1.7x 1.6% 966.HK China Taiping HKD HKD 5, % % NTRL 31Dec 25.6x 29.4x 23.6% 3.x 1.2% 2.3x.% 2318.HK Ping An CNY HKD 83,987 1,88 2.2% RSTR na RSTR 31Dec 24.5x 24.9x 26.% 4.1x 16.6% 2.4x 1.% 278,21 8, % 23.2x 23.x 24.6% 3.2x x 1.4% India RLCP.BO Reliance Capital INR INR 3, % % NTRL 31Mar 25.4x 25.4x 1.9x 7.6% 1.% MAXI.BO Max India INR INR % % OPFM 31Mar 19x 8.4% 1.5x.8%.% 4, x 17.5x 8.4% 1.7x 4.2%. Korea 3283.KS Samsung Life KRW KRW 18, % 13, , 15. NTRL 31Mar 15.8x 15.1x 4.3% 1.x 1.4% 8835.KS Korea Life KRW KRW 6, % 8,15 6,779,55 1,8 35.4% OPFM 31Mar 11.6x 11.3x 13.7%.9x 2.9% 8264.KS Tong Yang Life KRW KRW 1, % 11,8 11,415, 19, 65.1% OPFM 31Mar 8.1x 6.7x 26.4%.8x 4.% 583.KS Dongbu KRW KRW 2, % 45,15 29,545,6 5,2 13.4% OPFM 31Mar 9.x 9.4x 16.3% 1.6x x 2.2% 145.KS Hyundai M&F KRW KRW 2, % 25,25 17,526,75 28,7 16.9% OPFM 31Mar 8.x 8.2x 17.6% 1.3x 15..7x 3.3% 255.KS LIG Insurance KRW KRW 1, ,65 19,726,5 27,4 23. OPFM 31Mar 6.5x 8.2x x 11.8%.5x 2. 6.KS Meritz F&M KRW KRW % 8,62 6,758,83 1,4 25.2% OPFM 31Mar 5.8x 6.x 15.2% 1.x 17.3%.5x KS Samsung F&M KRW KRW 9, % 219, , 13.6% OPFM 31Mar 14.x 13.3x x 11.% 1.2x 1.7% 42,433 2, % 9.8x 9.8x x 14.4%.8x 2.8% South East Asia BKI.BK Bangkok Insurance THB THB % na na NR 31Dec 12.9x 12.9x BLA.BK Bangkok Life THB THB 1, na na NR 31Dec 17.2x 17.2x 3.9x % GELA.SI Great Eastern SGD SGD 5, % % OPFM 31Dec 14.5x 13.5x 1.2% 1.8x 13.8% 3.3% 8, % 14.9x 14.5x 2.8x 18.1% 2.6% Taiwan 2882.TW Cathay FHC TWD TWD 18, % % OPFM 31Dec 3.6x 22.7x 13.3% 2.2x 9.6% 1.1x 2.2% 2823.TW China Life TW TWD TWD 1, na na NR 31Dec 2.8% 2881.TW Fubon FHC TWD TWD 11, % % NTRL 31Dec 13.8x 12.4x x x 4.4% 2888.TW Shin Kong FHC TWD TWD 4, % NTRL 31Dec 23.2x 15.4x 97.1% 1.3x 8.7% 1.4x 3.3% 2833.TW Taiwan Life TWD TWD % na na NR 31Dec 36,768 2, % 22.5x 16.8x 7.% 1.6x 9.9% 1.3x 3.2% UK & Europe AEGN.AS Aegon EUR EUR 1,834 1, % % NTRL 31Dec 6.4x 8.1x 3.8%.6x 8.%.4x 2.7% AGES.BR Ageas EUR EUR 6, % % OPFM 31Dec 9.8x 1.7x 38.8%.5x 4..6x 5.% CNPP.PA CNP EUR EUR 11, % % NTRL 31Dec 7.x 7.x 7.1%.6x 9.%.9x 5.7% ING.AS ING EUR EUR 38,43 5, % % OPFM 31Dec 5.7x 5.6x 121.7%.8x 13.6%.8x 3. LGEN.L Legal & General GBP GBP 9, % OPFM 31Dec 7.7x 7.6x 3.% 1.x 12.7%.8x.% PRU.L Prudential GBP GBP 26,877 1, % % OPFM 31Dec 13.3x 6.7x 7.9% 1.5x 22.7% 1.1x.% PZU.WA PZU PLN PLN 1,415 1,83 1.4% % NTRL 31Dec 11.1x 11.x 13.2% 2.4x 21.7% 1.2x 4.1% SL.L Standard Life GBP GBP 7, % UPFM 31Dec 13.1x.7x.1% SLHN.VX Swiss Life CHF CHF 4, % % NTRL 31Dec 7.9x 6.9x 21.8%.5x 6.6%.8x 3.6% 127,433 12, % 8.6x 7.4x 3.2%.9x 11.2%.8x 2.3% United States AIG AIG USD USD 38,164 1, % RSTR RSTR 31Dec 65.2x AFL AFLAC USD USD 26, % % OPFM 31Dec 9.1x 9.1x 11.4% 2.6x 28.4% 2.% AMP Ameriprise Financial USD USD 14, % NTRL 31Dec 11.x 11.5x 12.3% 1.5x 12.7% 1.2% CNO Conseco USD USD 1, % % NTRL 31Dec 1.2x 1.7x 8.3%.4x 3.7% DFG Delphi USD USD 1, % NTRL 31Dec 8.x 8.2x 6.%.8x 1.1% 1.7% HIG Hartford Financial USD USD 12, % % NTRL 31Dec 7.5x 7.8x 5.%.6x 7.7%.6% LNC Lincoln National USD USD 9, % % NTRL 31Dec 8.x 8.2x 13.1%.7x 8.3% 2.7% MET MetLife USD USD 45,154 1, % % OPFM 31Dec 9.x 9.2x x 1.7% 1.6% PFG Principal Financial USD USD 1, % % OPFM 31Dec 11.4x 11.6x 8.7% 1.x 8.6% 1.4% PL Protective Life USD USD 2, % % NTRL 31Dec 8.9x 9.3x 16.3%.7x 7.3% 2.% PRU Prudential Financial USD USD 29,494 1,52 5.1% % OPFM 31Dec 9.7x 9.6x 2.%.8x 8.4% 1.% RGA RGA USD USD 4, % % OPFM 31Dec 7.8x 7.8x 13.%.7x 9.3%.9% SFG StanCorp Financial USD USD 2, % % NTRL 31Dec 9.x 9.1x 7.1% 1.x 1.6% 1.7% TMK Torchmark USD USD 4, % % UPFM 31Dec 8.9x 9.1x 7.3% 1.x 11.1% 4.% UNM UnumProvident USD USD 7, % NTRL 31Dec 8.4x 8.7x 4.6%.8x 9.2% 1.3% 211,148 8, % 12.8x 9.3x 8.2% 1.x 1.4% 1.7% Total LIFE insurance 735,178 37, % Arithmeitc average 15.2x 11.4x x x 2.3% Weighted average 18.7x 14.5x 2.6% 2.1x 14.1% 1.2x 2.2% Source: Company data (historicals only), Reuters, Credit Suisse estimates (1299.HK / 1299 HK) 15

16 Companies Mentioned (Price as of 4 Jan 11) Limited (1299.HK, HK$22.55, NEUTRAL [V], TP HK$23.5) AXA Asia Pacific Holdings (AXA.AX, A$6.31, NEUTRAL, TP A$6.43) Bank of China Ltd (3988.HK, HK$4.18, OUTPERFORM, TP HK$5.22) China Life Insurance Co. (2628.HK, HK$32.45, NEUTRAL, TP HK$37.) HSBC Holdings (5.HK, HK$8.3, OUTPERFORM, TP HK$97.) ING Group (ING.AS, Eu7.54, OUTPERFORM [V], TP Eu1.44, MARKET WEIGHT) Manulife Financial Corporation (MFC.TO, C$17.15) Prudential (PRU.L, 677.5p, OUTPERFORM, TP 75.p, MARKET WEIGHT) Zurich Financial Services (ZURN.VX, SFr245.8, NEUTRAL, TP SFr285., MARKET WEIGHT) For additional companies mentioned within this report, please refer to Figure 55. Disclosure Appendix Important Global Disclosures I, Arjan van Veen, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. See the Companies Mentioned section for full company names. 3Year Price, Target Price and Rating Change History Chart for 1299.HK 1299.HK Closing Target Price Price Initiation/ Date (HK$) (HK$) Rating Assumption 2Dec N X HK$ Dec1 6Jan8 6Mar8 6May8 6Jul8 6Sep8 6Nov8 6Jan9 6Mar9 6May9 6Jul9 6Sep9 6Nov9 6Jan1 6Mar1 6May1 6Jul1 6Sep1 6Nov1 Closing Price Target Price Initiation/Assumption Rating O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities. Analysts stock ratings are defined as follows: Outperform (O): The stock s total return is expected to outperform the relevant benchmark* by at least 11 (or more, depending on perceived risk) over the next 12 months. Neutral (N): The stock s total return is expected to be in line with the relevant benchmark* (range of ±11) over the next 12 months. Underperform (U): The stock s total return is expected to underperform the relevant benchmark* by 11 or more over the next 12 months. *Relevant benchmark by region: As of 29 th May 29, Australia, New Zealand, U.S. and Canadian ratings are based on (1) a stock s absolute total return potential to its current share price and (2) the relative attractiveness of a stock s total return potential within an analyst s coverage universe**, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. Some U.S. and Canadian ratings may fall outside the absolute total return ranges defined above, depending on market conditions and industry factors. For Latin American, Japanese, and nonjapan Asia stocks, ratings are based on a stock s total return relative to the average total return of the relevant country or regional benchmark; for European stocks, ratings are based on a stock s total return relative to the analyst's coverage universe**. For Australian and New Zealand stocks a 22% and a 12% threshold replace the 11 level in the Outperform and Underperform stock rating definitions, respectively, subject to analysts perceived risk. The 22% and 12% thresholds replace the +11 and 11 levels in the Neutral stock rating definition, respectively, subject to analysts perceived risk. **An analyst's coverage universe consists of all companies covered by the analyst within the relevant sector. Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 2% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. N (1299.HK / 1299 HK) 16

17 Analysts coverage universe weightings are distinct from analysts stock ratings and are based on the expected performance of an analyst s coverage universe* versus the relevant broad market benchmark**: Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. Market Weight: Industry expected to perform inline with the relevant broad market benchmark over the next 12 months. Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months. *An analyst s coverage universe consists of all companies covered by the analyst within the relevant sector. **The broad market benchmark is based on the expected return of the local market index (e.g., the S&P 5 in the U.S.) over the next 12 months. Credit Suisse s distribution of stock ratings (and banking clients) is: Global Ratings Distribution Outperform/Buy* 46% (61% banking clients) Neutral/Hold* 41% (6% banking clients) Underperform/Sell* 11% (52% banking clients) Restricted 2% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors. Credit Suisse s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. See the Companies Mentioned section for full company names. Price Target: (12 months) for (1299.HK) Method: We derive our HK$23.5 price target for using a sumoftheparts methodology (by country) using 1% of embedded value plus a value of new business (VNB) multiple, depending on on each countries growth profile and sense checked against PE and PBV multiples. The average implied group VNB mutliple is 14x. Risks: Key risk to our HK$23.5 price target for are: 1) economic / market risk (notably interest rates in countries where historically sold guaranteed policies), 2) operational and competition risk, 3) regulatory, political, tax and legal risk in all 15 markets it operates in, 4) distribution risk (mainly retention and motivation of salesforce) and 5) AIG remaining 33% stake (subject to 1218mth lock up). Please refer to the firm's disclosure website at for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names. The subject company (1299.HK) currently is, or was during the 12month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (1299.HK) within the past 12 months. Credit Suisse has managed or comanaged a public offering of securities for the subject company (1299.HK) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (1299.HK) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (1299.HK) within the next 3 months. Important Regional Disclosures Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (1299.HK) within the past 12 months. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVSNonVoting shares; RVSRestricted Voting Shares; SVSSubordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the nonaffiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit The following disclosed European company/ies have estimates that comply with IFRS: ING.AS, PRU.L, ZURN.VX. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at anytime after that. (1299.HK / 1299 HK) 17

18 To the extent this is a report authored in whole or in part by a nonu.s. analyst and is made available in the U.S., the following are important disclosures regarding any nonu.s. analyst contributors: The nonu.s. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The nonu.s. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Arjan van Veen, nonu.s. analyst, is a research analyst employed by Credit Suisse (Hong Kong) Limited. Frances Feng, nonu.s. analyst, is a research analyst employed by Credit Suisse (Hong Kong) Limited. Paul Lloyd, nonu.s. analyst, is a research analyst employed by Credit Suisse Securities (Europe) Limited. For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at or call +1 (877) Disclaimers continue on next page. (1299.HK / 1299 HK) 18

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