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<Research>CICC Says AIA Shr Price Trend Deviates from Fundamentals, Draws Attention to Buybacks & Div.
AIA (01299.HK) 's share price has drifted lower since the release of its 2023 annual report, closing at $48.6 on 12 April 2024 (last Friday), with valuation falling below CICC's forecast of 1x 2024 P/EV.
The broker maintained its earnings forecast on the company. In light of the fading trust of the market in the P/EV valuation system, CICC axed its TP by 21% to $74, and kept Outperform rating.
According to CICC, the arrest of unlicensed brokers by the Insurance Authority and the ICAC raised concerns about AIA's Mainland China Visitor (MCV) business in Hong Kong.
Overall, AIA Hong Kong accounted for 33% of the Group's VONB in 2023, of which approximately 50% stemmed from MCVs and approximately 1/3 of MCV policies from brokers. This means that the Hong Kong, China brokerage channel will contribute approximately 5% to AIA's VONB.
CICC continued to believe that AIA's competitive advantage over its peers on the liability side is longevity and stability.
However, in the current environment where the share of savings and bancassurance is increasing in many regions, it may be difficult for AIA to outperform its peers as much as it has done in the past.
It is important to keep an eye on the company's subsequent profit, VONB and operating profit trends compared to its peers, CICC highlighted.
The broker recommended to pay attention to the first quarter or interim results of the company which will state the company's stance on buybacks or dividends.
If the buybacks continue, it is expected to bolster the share price strongly.
Source: AAStocks Financial News
http://www.aastocks.com/en/stocks/news/ ... -news/AAFN