Goldman Sachs: Maintains "Buy" rating on AIA (01299) with target price of HK$95; third-quarter new business value declined but growth improved at quarter-end.

Goldman Sachs released a research report maintaining a "Buy" rating on AIA (01299) with a target price of HK$95. The company's third-quarter value of new business (VONB) fell 5% and 4% at constant exchange rates and actual exchange rates, respectively, to US$1.415 billion, 2% below the bank's expectation and 1 percentage point below market consensus. The bank expects the market's initial reaction to the third-quarter business update to be relatively muted, as the VONB decline had been well anticipated and the overall performance was broadly in line with both the bank's and market expectations. However, Goldman Sachs noted three aspects of the third-quarter performance that could deliver positive surprises: first, Hong Kong market performance beat expectations, with VONB down 3% year-on-year, better than the bank's prior forecast of a 6% decline; second, Thailand achieved positive growth on a high base; third, growth was strong at quarter-end, with September VONB up more than 25% year-on-year, and Hong Kong combined August and September growth of about 20% year-on-year. The bank said the third-quarter miss was mainly dragged down by the mainland China market, where VONB fell 33% year-on-year versus the bank's prior forecast of an 8% decline. The base effect from product repricing in July and August 2025, as well as disruptions to the bancassurance channel in 2026, both had a greater impact than expected. However, the bank was encouraged by a significant increase in the share of protection-type product sales in the agency channel, with agency-channel VONB returning to strong growth in September. In other markets, Thailand VONB rose 9% year-on-year and improved sequentially, beating the bank's expectation; Singapore VONB rose 22% year-on-year, accelerating from 10% growth in the first half; Malaysia's agency channel growth accelerated, driving a 10% year-on-year increase in VONB for the region; other markets saw VONB rise 14% year-on-year. Looking ahead, the bank believes the base effect has largely faded and expects AIA's fourth-quarter VONB to return to double-digit growth, with Hong Kong and mainland China markets also expected to achieve double-digit growth in fiscal 2027. AIA's current share price represents about 1x forecast fiscal 2027 P/EV, below the three-year and five-year historical averages of 1.1x and 1.4x. By the bank's estimate, the total shareholder return for fiscal 2027 is 5.4%. Goldman Sachs views the company's risk-reward as attractive, with the recent share price weakness offering a good entry opportunity.