UBS released a research report stating that it gave AIA (01299) a “buy” rating. It is expected that embedded value (EV) and profit before tax will resume growth throughout the year, with a target price of HK$90. The company will announce its results for the first quarter of 2024 at the end of April. The new business value (VNB) is expected to increase by 20% and 23%, respectively, based on the actual exchange rate and fixed exchange rate, while the market is expected to increase by 19% and 22%.
According to the report, the value of new business in Hong Kong will record strong quarterly growth; since Hong Kong only officially cleared customs in early February last year, the value of its new business may be higher compared to the previous year. As for profit margins, no significant changes are expected from quarter to quarter, as the product portfolio for mainland inbound customers (MCV) market segments is generally stable. Based on a year-on-year comparison calculation, it is estimated that profit margins are affected by changes in customer structure. The profit margin of the MCV business is lower than that of domestic customers because the MCV business is mainly based on savings.
The bank believes that the value of new businesses in the mainland market recorded good year-on-year growth, benefiting from increased gross profit. According to the report, the main reason for the increase in gross profit is the banking insurance commission reform and the reduction in pricing interest rates. Furthermore, Southeast Asia and other markets are expected to achieve double-digit growth as a whole. Thailand's new annualized premiums will increase 26% year-on-year in the first two months of 2024, while Singapore and Malaysia are expected to record positive new business value in the first quarter of this year.