by winston » Mon Mar 14, 2016 1:05 pm
not vested
<Research Report>Citi Downgrades AIA(01299.HK) to Neutral with Target Cut to $47
Citigroup, in its report, said AIA(01299.HK)'s share price has been rising nearly 1.2 times since its listing, significantly outperforming Hang Seng Index and financial stocks of Hong Kong and mainland China.
It considered AIA was a well-owned stock with well-known strengths. It believed the share price to be capped in foreseeable future, mainly due to mainland's tighter capital controls affecting HK business.
Both Asian regional economies and markets face challenges; new business value slows down. The research house downgraded AIA (01299.HK) to Neutral from Buy with target cut to $47 from $60.
There were reports saying the People's Bank of China will forbid mainland residents to use electronic payment services, such as UnionPay cards, and buy life insurance and investment-related products to curb further outflows of RMB.
For this, Citigroup considered the direct impact on AIA's HK business is relatively low as its business focuses protection products instead of large investment products. However, AIA's valuation's rising momentum would be hindered by mainland's stricter capital controls.
Citigroup lowered forecasts on AIA's NBV, EV and earnings. Of which, its NBV has already been keeping 20%-above growth for five years based on fixed exchange rates.
It forecast AIA's NBV growth for 2016 to ease to 16%, falling short of the growth of 24% and 19% for 2014 and 2015 respectively, considering currency devaluation of ASEAN and potential slowdown of HK business.
Source: AAStocks Financial News
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