A SURGE in Ping An Insurance (Group) Co.’s shares this year has made it the world’s second-largest insurer by market value after Berkshire Hathaway Inc. And the rally may not be done yet.

Shares of the Shenzhen-based insurer, which more than doubled this year to boost the company’s market valuation to about US$208 billion, jumped Tuesday to a new record after chief financial officer Jason Yao told reporters that the firm’s technological prowess was under-rated.

Ping An’s valuation has much room to increase as the company gradually spins off Internet technology units for their own listings, Yao said.

Saddled in the past with a so-called “conglomerate discount,” because of its integrated financial services model, Ping An has come to be viewed more positively by analysts on signs the approach is working.

Nomura Holdings Inc. said in a note Tuesday that it raised the price target on Ping An shares to HK$92.22 (US$11.99) — a more than 10 percent increase from current levels — citing the company’s strength in technology such as artificial intelligence, big data and biometrics.

After spending heavily on technologies in the past few years, Ping An is entering “harvest time” as such investments enhance its financial services, tech products bring in new revenue, and potential spin-offs of units create additional value for shareholders, Yao said. Shares trading at below 20 times earnings are “not very high” compared with above 50 for technology stocks, he said.

“The market had been valuing Ping An Insurance as a pure insurer and ignoring the technology side of the company, while the management also believed it’s been undervalued,” said Liao Chenkai, a Shanghai-based analyst with Capital Securities. “Investors are betting the company could benefit from its financial technology strength and boost overall business.”

Ping An regards Berkshire Hathaway as not directly comparable — and so calls itself the world’s largest insurance group. Warren Buffett’s firm has a market value of about US$448 billion. China Life Insurance Co., with a market value of US$135 billion, is the second-biggest Chinese insurer by that measure.

As Ping An shares have rallied, short-sellers are taking aim. Short interest had risen to 6.1 percent of free float as of Nov. 14, from a low of about 1.7 percent in March, according to data from IHS Markit Ltd.

(SD-Agencies)