AIA Group 1299 02 (Jun 20 - Dec 27)

[winston]

not vested

Brokers│Views

Daiwa│Growth path clear

UBS│Growth of Mainland visitors remained focus

Morgan Stanley│Business results resilient amid headwinds

Huatai Securities│Mainland Chinese insurance customers supported growth

Jefferies│2H22 results reassuring; 2023 results expected to sustain upbeat momentum

CICC│New business initiatives' performance showed greater resilience

Citigroup│2022 VONB in line; Mainland and Macau businesses showed positive momentum in first two months of 2023

JPMorgan│Results largely in line

China Merchants Securities│Strong post-Covid business growth momentum attested corporate governance capability

Goldman Sachs│Results in line with positive sales momentum in 2H22

CLSA │Outlook solid

Credit Suisse│VONB hailed inflection point in 2H22

China Securities│Results in line; 2023 outlook optimistic

HSBC Global Research│VONB recovery momentum strengthened

GF Securities│Results hampered by COVID pandemic and investments; Mainland and Hong Kong businesses poised to hail recovery

Nomura│Operating guidance positive on the back of China's reopening

BofA Securities│Gearing up for normalization and growth

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... 251101/all

[winston]

not vested

Money, money, money… from MCV

We see 1Q23F results highlighting HK/China strength, with VONB growth getting progressively stronger yoy throughout 1Q23F.

More importantly, VONB growth looks well placed to continue to accelerate further in 2Q23F and 2H23F for these regions.

We believe AIA may have also used the broker channel to tap the rapid recovery of MCV insurance purchases, which are relatively large case-size.

Reiterate Add rating with a TP of HK$109. AIA remains our sector top pick.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... F72D59C8EA

[winston]

Benchmarking MCV: Better than 2018?

With the high-speed rail (HSR) only launched in Sep 2018, using 2018 to estimate MCV insurance upside may be overly conservative, in our view.

Greater HSR connectivity is helping non-Guangdong MCV recover more rapidly. This segment comprised 80% of AIA’s pre-pandemic MCV VONB.

Rapidly rising use of HSR by MCV also means a rebound is less impacted by constraints of airline capacity and expensive air tickets, in our view.

Reiterate Add rating with unchanged TP of HK$109. Remains top sector pick.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 8517562579

[winston]

Underestimated MCV insurance strength

HSBC Life stated that its Apr 2023 HK MCV insurance sales have recovered to Apr 2019 levels, despite Apr 2023 system MCV only at 54% of Apr 2019’s.

This supports our argument that investors who simplistically track total MCV numbers are underestimating MCV insurance sales strength in 2023-YTD.

Multiple tailwinds continue to drive system MCV insurance sales strength, including the Rmb’s weakness against the US$ (historically 91% correlated).

Retain conviction in our FY23F AIA VONB growth forecast of 36% (Bloomberg consensus: 22%). Reiterate Add rating. Remain sector top pick. TP HK$111.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 9E73B7E685

[winston]

not vested

<News Alert> One time uplift in OPAT and book value upon IFRS 17 adoption

AIA was seen one-time uplift in FY22’s OPAT, shareholders’ allocated equity and shareholders’ equity of 1%/5%/17% upon IFRS 17 adoption, largely in line

As mark-to-market (MTM) movement in participating business and unit-link products (savings) will be absorbed within contractual service margin (CSM), net profit will become less volatile
FY23’s opening CSM will be US$50.2bn, new business CSM is expected to be 2x of value of new business (VONB)

AIA’s key financial metrics improved in FY22 under IFRS 17, with OPAT, shareholders’ allocated equity (excluding par business’ equity) and shareholders’ equity rising by 1%/5%/17% respectively, net profit increased by US$3bn to US$3.3bn.

Sources of earnings become more transparent by breaking down into
a) insurance contract services,
b) spread and
c) return on net worth, and CSM release will serve as the core driver of OPAT.

The new business CSM drives CSM accumulation and is expected to be 2x of VONB. The opening CSM reached US$50.2bn in 2023. VONB, embedded value (EV) and free surplus remain key measures of shareholder value creation.

We expect net profit and book value to be less volatile upon IFRS 17 adoption, which is considered positive.

The new accounting rule helps to remove the accounting mismatch and stabilize book value, where both of the assets and liabilities should be marked-to-market by adopting the updated discount rate and measuring at fair value.

As participating business and unit-link products (savings), which account for 41% of total invested assets, will be measured by variable fee approach (VFA) model, the discount rate changes, asset MTM and interest rate hedges will go through CSM, which results in reduced net profit volatility.

Source: DBS

https://www.dbs.com/insightsdirect/comp ... ecid=14712

[winston]

not vested

Near-term tailwinds but policy risks building

We remain bullish on near-term MCV insurance growth, given tailwinds from falling deposit rates in mainland China and US$/Rmb trends.

Our main concern is rising medium-term policy risks, should policymakers in mainland China become more concerned about capital outflows.

Within mainland China, we believe AIA’s 2Q23F VONB benefits from lowbase effects more than peers’, based on subway traffic data analysis (Fig 7).

Reiterate Add and sector top pick. TP unchanged at HK$111.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... D9510F3EB1

[winston]

vested

Daiwa Expects AIA to Post 25% YoY Growth at AER for VONB in 1H23

Daiwa issued a rating report on AIA (01299.HK), predicting a 25% YoY growth in VONB in actual exchange rate (AER) terms for the first half of the year, implying a 27% increase in the second quarter.

The broker also predicted a 2% HoH rise in enterprise value per share, with the main underlying growth partly offset by the impact of buybacks, dividends and foreign exchange.

Daiwa noted that AIA's VONB may accelerate in the second quarter, and expected its first-half operating profit after tax to fall 5% YoY to US$3.19 billion.

The broker maintained its $145 target price and Buy rating.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

vested

CICC Predicts AIA 1H23 VONB on AER Basis to Swell 27.5% YoY

CICC forecast the value of new business of AIA (01299.HK) in the first half of 2023 to burgeon 27.5% on a YoY basis, with the operating profit after tax (OPAT) dropping 3.2% YoY to USD3.3 billion.

For Hong Kong operations, CICC noted a strong recovery of the mainland Chinese visitor (MCV) business for insurance products over the second quarter.

AIA's VONB contribution from the MCV business in 1H23 may reach 65% of 2019 level.

Related News: Daiwa Expects AIA to Post 25% YoY Growth at AER for VONB in 1H23

CICC axed the 2023-24E EPS for AIA by 28% and 12% to USD0.5 and USD0.64, respectively.

The target price on the stock was kept at $108, with an Outperform rating.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

vested

G Sachs Forecasts AIA 2Q23 VONB to Hike 33% YoY on AER, Rating Buy

Goldman Sachs issued a rating report on AIA (01299.HK), expecting its Value Of New Business (VONB) to rise 33% YoY to USD912 million in 2Q on actual exchange rates, benefiting from a sustained recovery in sales to inbound mainland Chinese visitors, and a lower base performance in mainland China.

The 2Q VONB is growing at a faster rate than the 1Q growth rate of 23%.

For 1H23, the broker expected AIA's VONB to rise 27% YoY to USD1.957 billion actual exchange rates, with operating profit rising 2% YoY to USD3.425 billion under IFRS 17 basis.

Related News: CICC Predicts AIA 1H23 VONB on AER Basis to Swell 27.5% YoY

Goldman gave AIA a target price of $101 and a Buy rating.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

[winston]

vested

AIA: We Expect MCV Recovery in Hong Kong To Drive First-Half VNB Growth

by Iris Tan

In light of stronger-than-expected mainland Chinese visitor, or MCV, data in the second quarter, we modestly lift our full-year premium growth assumption for AIA 01299 by 2.5 percentage points to reflect faster-than-expected recovery in the MCV business to 50% of 2019′s level, from 30% in our previous assumptions.

We retain our fair value estimate for AIA at HKD 96 per share, however, as the change is not enough to trigger valuation adjustment.

The stock remains undervalued, trading at 1.6 times 2023 price/embedded value, or EV, versus its past-six-year average price/EV ratio of 1.9 times.

Compared with the 0.2 times to 0.6 times 2023 price/EV ratios of the undervalued Chinese peers, we believe AIA’s valuation premium is justified by its superior agent force, above-peer new business margins and prudent management of product mix.

In the longer run, we believe its ongoing geographic expansion in China should support a stronger-than-peer new business growth momentum.

Source: Morning Star

https://www.morningstar.com/stocks/aia- ... vnb-growth