Here's Why I Think People's Insurance Company (Group) of China (HKG:1339) Might Deserve Your Attention Today

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In contrast to all that, I prefer to spend time on companies like People's Insurance Company (Group) of China (HKG:1339), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for People's Insurance Company (Group) of China

How Fast Is People's Insurance Company (Group) of China Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. People's Insurance Company (Group) of China managed to grow EPS by 10% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. I note that People's Insurance Company (Group) of China's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note People's Insurance Company (Group) of China's EBIT margins were flat over the last year, revenue grew by a solid 2.6% to CN¥586b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future People's Insurance Company (Group) of China EPS 100% free.

Are People's Insurance Company (Group) of China Insiders Aligned With All Shareholders?

Since People's Insurance Company (Group) of China has a market capitalization of HK$250b, we wouldn't expect insiders to hold a large percentage of shares. But we are reassured by the fact they have invested in the company. To be specific, they have CN¥307m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 0.1% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. A brief analysis of the CEO compensation suggests they are. For companies with market capitalizations over CN¥52b, like People's Insurance Company (Group) of China, the median CEO pay is around CN¥6.6m.

The CEO of People's Insurance Company (Group) of China was paid just CN¥34k in total compensation for the year ending . You could consider this pay as somewhat symbolic, which suggests the CEO does not need a lot of compensation to stay motivated. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Is People's Insurance Company (Group) of China Worth Keeping An Eye On?

One positive for People's Insurance Company (Group) of China is that it is growing EPS. That's nice to see. Earnings growth might be the main game for People's Insurance Company (Group) of China, but the fun does not stop there. Boasting both modest CEO pay and considerable insider ownership, I'd argue this one is worthy of the watchlist, at least. Even so, be aware that People's Insurance Company (Group) of China is showing 1 warning sign in our investment analysis , you should know about...

Although People's Insurance Company (Group) of China certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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