Citigroup: AIA's new business value increased by 14% in the first half of the year, slightly exceeding earnings estimates per share. The "buy" rating is maintained.

Citigroup released a research report stating that it maintains a "buy" rating on AIA (01299) and the target price of 103 Hong Kong dollars based on the intrinsic value assessment method remains unchanged. The bank expects AIA to announce its interim performance for the first half of 2026 on August 20. Despite facing challenges from high base effects, the new business value of China and Hong Kong operations calculated at fixed exchange rates is expected to increase by 19% and 13% year-on-year respectively, driving the overall new business value of the group to grow by 14% to 3.232 billion US dollars in substantial exchange rate terms. At the same time, taking into account the impact of share buybacks, it is expected that the earnings per share attributable to shareholders will increase by 11% year-on-year, and the mid-term dividend per share is also expected to increase by 12%. The bank pointed out that, calculated at fixed exchange rates, AIA China recorded a 26% increase in new business value in the first quarter, but due to a significant increase in the base in the second quarter, the cumulative growth rate for the first half of the year is expected to slow down to 19% (26% in substantial exchange rate terms); as for Hong Kong, due to the acceleration of sales caused by the implementation of capped return products in July 2025, the base is also facing challenges, resulting in a drop in the growth rate of new business value in the first half of the year from 21% in the first quarter to 13%. However, savings products and agency teams in Singapore and Malaysia are recovering momentum, and the decline in new business value in the first half of the year in Thailand is expected to narrow from 18% in the first quarter to 8% due to the normalization of the impact of co-payment policy in the second quarter. Citigroup updated its financial model for AIA before the announcement of its interim performance, mainly raising its forecast for net investment income, thereby increasing the earnings per share forecast for the fiscal years 2026 to 2028 by 5%, 2%, and 2% respectively.