Pls see attached the full PDF research report, below is a highlight:
 
Key Points:
◆       We initiate coverage of Ming An Holdings with an ACCUMULATE recommendation. Based on a sum-of-the-parts valuation, we derive a fair value of HK$1.08, giving 86% upside potential.
◆       We believe that Ming An’s HK segment will maintain its leading position and generate steady premium income, and that Ming An China’s premium income will continue to boom, with a 50~60% growth rate in 2009 and 2010, boosted by surging premiums from newly established branches.
◆       We expect the HK segment’s combined ratios to be 90~95%, indicating modest underwriting profits. Ming An China’s combined ratios will decrease gradually to their normal level due to better customer selection and declining expense ratios.
◆       Following the increase in expense ratios since 2007, we expect Ming An China to continue to see underwriting losses in FY08 and FY09. The company needs to provide continuous subsidies to its China business from underwriting profits from Hong Kong and investment returns.
◆       Based on Ming An’s leading position, stable operating foundation in Hong Kong, promising growth outlook and better underwriting discipline than peers in mainland China, we believe the company will manage a successful turnaround and enjoy rapid growth and decent profits going forward.
◆       Major valuation r\isks include Ming An China’s limited track record and the stock’s low liquidity, with a small market cap of just HK$1.69bn.

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