FEW Chinese companies divide the stock market like Ping An Insurance Group Co.

The largest Chinese insurer by market value is 2018’s most popular mainland stock among foreign investors, who have net bought 16.1 billion yuan (US$2.4 billion) in its Shanghai-traded shares. That’s more than for any other firm via trading links between Hong Kong and the mainland.

On the other hand, it’s being ditched in Hong Kong by mainland investors. They’ve sold more Ping An shares there than any other company this year apart from Tencent Holdings Ltd., and they’re also selling onshore.

“Views are diverging between mainland and foreign investors toward Ping An,” said Steven Lam, a Hong Kong-based analyst at Bloomberg Intelligence. “Many foreign investors not only value the stock as an insurance company, but a fintech player.”

Ping An said last year it aimed to eventually get half its earnings from technology, a development that could make investors rethink their valuation methodology on a traditional-economy stock. The company’s stock market capitalization climbed US$101 billion last year, partly thanks to its investments in online services.

Analysts seem to side with foreigners. The stock has no “sell” ratings and their average price target implies it will rise at least 30 percent in both Hong Kong and Shanghai over the next 12 months from last Monday’s close.

“It’s the best Chinese financial company to institutional investors,” said Vincent Hsu, a Taipei-based fund manager at Fuh-Hwa Securities Investment Trust Co., who has been buying shares over the past few months. “Lots of foreign investors are buying Ping An, as the stock ranked top in the criteria valuing a company’s business, investment and capital.”

Ping An’s management has repeatedly said the share price doesn’t fully reflect the value of the company, which spans insurance, banking and asset management. The conglomerate reported a 34 percent net profit increase in the first half, helped by a jump in fintech and health care business.

But Chinese mainland investors still have their doubts.

Ping An’s Shanghai-listed shares have been cheaper than those in Hong Kong since June. Its A shares trade at 9.6 times forward 12-month earnings, while its H shares are at about 10.5. By contrast, technology shares on the CSI 300 Index trade around 21.8 times.

“The fact that Ping An’s A shares aren’t substantially more expensive than H shares is a reflection of the hesitation for domestic investors to give more credit to its fintech story,” said Daiwa Capital Markets Hong Kong’s Leon Qi, the only analyst who doesn’t rate Ping An a “buy.”

The combined stake of mainland investors in Ping An’s Hong Kong-listed shares is close to a one-year low, while foreign investors hold the most A shares since at least March 2017, according to calculations based on exchange data.

Mainland investors may have chosen to sell liquid heavyweight companies such as Ping An as general sentiment turned against Hong Kong stocks and there was a rush to exit, said Christine Wu, vice president at Yuanta Securities Investment Trust.

Hengsheng Asset Management Co. fund manager Dai Ming echoed Daiwa Capital’s Qi’s views on fintech doubts. “It’s still a bit early to say Ping An’s tech ambition will be realized,” he said. “Conglomerates like Fosun also have such ambitions to develop fintech, but the results haven’t been very satisfying.”

Earnings of Ping An’s online lending platform Lufax could slow, Dai said. He remains bullish on Ping An though, mainly because of its advantage in the insurance business. It is the only Chinese insurer that managed to keep new business value growing this year while other life insurers were more affected by tightening measures, he said. (SD-Agencies)