AIA Group 1299

[winston]

Decoding HK: Margin-driven growth

AIA HK’s 2H21 record high VONB growth of 82% yoy has attracted significant investor queries on sustainability, with 2H21 margins also at a record high.

A key driver of HK’s 2H21 VONB margins was higher US rates. We see this continuing in FY22F given the sharp rise in US 10-year bond yields (Fig 6).

A key concern is falling HK agent numbers yoy (-5% for AIA in 2021). Industry data show conditions in Mar 2022 (-9%) were the worst in 16 years (Fig 24).

Reiterate Add rating. Trim TP to HK$100 on lower FY22F-24F VONB.

Source: UOBKH

https://rfs.cgs-cimb.com/api/download?f ... 4465807A4B

[winston]

1Q22F preview: Can margins save the day?

We view 1Q22F to be the toughest quarter for value of new business (VONB) yoy at -18%, versus 2Q22F’s -12.4%, 3Q22F’s +9.2% and 4Q22F’s +11.2%.

While we see weak HK annualised new premium (ANP) volumes, we see a strong HK margin performance helping cushion the impact of Covid-19.

We see China as the worst performing market for VONB growth, due to falling margins, a high base and Covid-19 outbreaks.

Reiterate Add; TP cut to HK$94 as we mark-to-market for weak equity markets, with cuts to our FY22F-24F EPS, EV & VONB.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 19D17CB64A

[winston]

not vested

Moving past the worst quarter

In-line 1Q22 VONB. HK strength was more than offset by China weakness.

China’s product mix had shifted noticeably towards savings during the Covid19 pandemic in 2021 (Fig 5), and this shift continued in 1Q22 yoy.

We see a more positive VONB outlook in 2Q22F, especially in ASEAN where
Covid-19 infections have clearly peaked.

Remain top sector pick. Reiterate Add. Unchanged TP of HK$94

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 64336BCE86

[winston]

not vested

AIA Group Ltd (1299 HK) - 1Q22 VONB fell 18%

AIA is the largest independent listed pan-Asian insurance provider with presence in 18 markets and offering a diversified products range including life, accident, health insurance and retirement savings plans).

We view AIA as a longer-term beneficiary of the rise in Asia’s middle class and affluent which will have growing protection and wealth accumulation needs.

Prudent management, strong execution and well-trained agents, drive sustainable new business growth and margin expansion from higher margin products.

Although impact from the pandemic remains a risk to monitor in the near-term, we see a sequentially improving outlook over the medium-term supported by further normalization of its business as mass vaccination takes place regionally and its China expansion plan continues to progress.

AIA has announced a USD10b share buyback plan in 2022 which spans the next three years and adds to its progressive dividend policy. BUY.

Source: OCBC

[winston]

AIA Group
Margin tailwinds, currency headwinds

We see sharply higher HK margins as AIA’s key 1H22F VONB driver, with this more than offsetting agency sales weakness.

The recent adverse currency movements lead us to expect a 4%-pts drag on
VONB growth in 2Q22F, 3Q22F and 4Q22F.

Outside of HK, we see Singapore and to a lesser extent Thailand as the better performing regions for AIA.

Reiterate Add. Our TP is raised slightly to HK$96 as we mark-to-market for equity markets. AIA remains our top pick of the insurance sector.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... CC6BC0DFB3

[winston]

not vested

JPM Slashes AIA (01299.HK) 2Q22E NBV to USD700M

JPMorgan reported that it has been observing local reopening across Asian markets, including mainland China, and has noted that sales agents in Shanghai are permitted to conduct face-to-face meetings for life policy sales from this month.

Shanghai and Beijing contributed 36% of premium income for AIA (01299.HK)'s mainland China business in 2021. The insurance businesses in the two cities were severely disrupted over the past three months due to pandemic-induced "lockdowns". JPMorgan believed that the group's mainland China operation could recover and hail business expansion in 2H22.

Calculating based on the actual exchange rate (AER), JPMorgan slashed the 2Q22E NBV for AIA from USD812 million to USD700 million, indicating an 8% YoY drop in NBV in 2Q22 and a 14% decline in 1H22.

The stock was rated at Overweight, with a target price of HKD102.

Source: AAStocks Financial News

[winston]

vested

BofAS Expects AIA (01299.HK) 1H VNB to Sink 16%, Rating Buy

AIA (01299.HK) will report its 1H22 results in August, reported BofA Securities.

The group's VNB was predicted to fall by 16% YoY on the actual exchange rate (AER) basis, compared to the 19% decline in 1Q22.

Among its major markets, the NBV growth of AIA's mainland China operations will likely be the weakest, down by 36% YoY, mainly due to the pandemic-induced lockdowns in 2Q22 and tepid demand, the broker anticipated.

Related News: JPM Slashes AIA (01299.HK) 2Q22E NBV to USD700M

BofA Securities maintained the Buy rating for AIA and viewed its risk/reward as attractive, based on its long-term growth potential.

The broker preferred AIA over Chinese insurers and set the target price for the former at $100.

Source: AAStocks Financial News

[winston]

not vested

C Suisse Trims AIA (01299.HK) TP to $100, Rating Outperform

AIA (01299.HK) is set to report the 1H22 results on 25 August.

Factoring in equity market and foreign exchange movements, Credit Suisse lowered the 2022-24E EPS for AIA by 2% and slashed the 2022E VNB to factor in the GPM pressure for the group's China operation and change in border reopening date assumption.

The target price for AIA was trimmed from $102 to $100, with its rating kept at Outperform.

Related News: BofAS Expects AIA (01299.HK) 1H VNB to Sink 16%, Rating Buy

Credit Suisse projected that AIA's VNB will reach USD1.6 billion in 1H22, down 14% on an actual exchange rate (AER) basis and 12% on a constant exchange rate (CER) basis.

The group's OPAT and DPS for 1H22 were anticipated to stretch by 4% YoY each, to USD3.3 billion and HKD0.4, respectiely.

Source: AAStocks Financial News

[winston]

vested

M Stanley Chops AIA (01299.HK) TP to $111, Rating Overweight

AIA (01299.HK) is planning to release the 1H22 results on 25 August, reported Morgan Stanley.

The 1H22 VNB of AIA was predicted to fall by 14% on a constant exchange rate (CER) basis and 16% on an actual exchange rate (AER) basis, primarily due to impacts from pandemic-induced lockdowns in mainland China.

On a quarterly basis, AIA's 2Q22 performance was expected to be better than that of 1Q22, benefitting from the recovery of the Hong Kong and ASEAN businesses.

Morgan Stanley forecast that the decline will continue to narrow throughout 2022.

Related News: BofAS Expects AIA (01299.HK) 1H VNB to Sink 16%, Rating Buy

AIA's target price was chopped from $124 to $111, with its rating kept at Overweight.

Source: AAStocks Financial News

[winston]

vested

CICC Sees AIA (01299.HK) 1H NBV to Fall 14.6% YoY, Rating Outperform

AIA (01299.HK)'s 1H22 NBV was forecast to fall by 14.6% YoY on an actual exchange rate (AER) basis and 12.6% YoY on a constant exchange rate (CER) basis, according to a report published by CICC.

Given that Shanghai, Jiangsu and Beijing, accounted for roughly 50% of AIA China’s total NBV, the COVID-19 resurgence in 2Q22 will likely pose a relatively substantial impact on the group's new business.

CICC slashed the 2022-23E EPS for the group by 5.8% and 2% to USD0.55 and USD0.69, respectively.

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

Related News: M Stanley Chops AIA (01299.HK) TP to $111, Rating Overweight

Source: AAStocks Financial News