Ping An’s Tech Dreams May Yet Exit Intensive Care

Home remedies. Ping An Insurance, may have a chance to rehabilitate its fintech reputation. A few years ago the company was busy spinning off its home-grown internet startups to boost its valuation. The zest has long gone. Yet a quirky special dividend is giving it back majority control of beaten-down but cash-rich Ping An Healthcare and Technology, just as the online medical firm’s fortunes look set to improve.

Few could fault the $110 billion insurer’s carve-outs timing. Ping An Healthcare went public in Hong Kong in 2018, two years before online medical services became an investment hot spot amid the Covid pandemic. Online lender Lufax followed in 2020, just months before Beijing ushered in a sweeping crackdown on the internet industry. The lucrative listings persuaded investors that the parent was as much a tech firm as a financial one. Its share price soared to a record high in early 2021, but has since fallen some 60%.

Ping An Healthcare fell even harder. Its market value topped out at $21 billion in 2021. But more than 95% of that has since been wiped out as revenue shrank; at one point last year its market capitalisation fell below its cash value.

So in November, the insurer, which kept an almost 40% stake, proposed that the healthcare company return most of its $1.4 billion cash pile to shareholders. But it then took its payment in stock, while most of the remaining investors opted for money. That has boosted Ping An's ownership to almost 53% effectively without having to pay a cent. That has triggered a mandatory offer for the rest of the company, under Hong Kong rules, but Ping An has made clear it has no intention of taking the healthcare unit private. A similar manoeuvre last year allowed it to regain majority control of Lufax.

Ping An's timing looks good yet again. The medical-service provider finally broke even in the first six months of 2024 after losing money for the previous nine years. It looks set to turn a profit this year, and revenue is forecast to grow 10% in 2025, per estimates gathered by LSEG.

Sure, that won't suddenly boost the insurer's lagging stock. It currently trades at barely 5 times forecast 2024 earnings, per LSEG, far short of peer Prudential's 9.5 times multiple. But it's an encouraging sign that Ping An may be getting its battered tech dreams out of intensive care.