Investment Rating - Maintain BUY with a target price of HK$137.8, implying an upside of 83.7% from the current price of HK$75.00 [2][4]. Core Insights - Prudential Plc. announced a US$2 billion share buyback plan to be completed by mid-2026, alongside a projected annual dividend growth of 7%-9% for FY24E [2]. - The first tranche of US$700 million buyback will occur from June 24, 2024, to December 27, 2024, with an estimated reduction of approximately 78 million ordinary shares in FY24E [2]. - The company’s free surplus ratio remains strong at over 200%, with a free surplus of US$8.5 billion in 2023, indicating robust capital management [2][4]. - The buyback is expected to enhance liquidity for the Hong Kong-listed shares, which currently have a low floating share percentage of 6.73% [2]. - The insurer aims for a double-digit CAGR of gross operating free surplus generation, targeting over US$4.4 billion by 2027 [2][4]. Financial Performance Summary - Net profit is projected to increase from US$1.712 billion in FY23A to US$2.149 billion in FY24E, with operating EPS expected to rise from US$0.85 in FY23A to US$0.95 in FY24E [4][12]. - The Group's embedded value per share is forecasted to grow from US$16.4 in FY23A to US$18.4 in FY24E [4][12]. - The return on equity (ROE) is expected to improve from 9.8% in FY23A to 11.5% in FY24E [4][12]. Valuation Metrics - The stock is currently trading at a P/EV of 0.52x for FY24E, with a target P/EV of 0.95x [2][4]. - The projected dividend yield for FY24E is 2.3%, increasing to 2.5% in FY25E [4][12]. - The company’s net business profit (NBP) is anticipated to reach US$4.9-5.0 billion by FY27E, reflecting an 18% CAGR [2][4].

Investment Rating - The report assigns an "Accumulate" rating to Prudential (2378) [2][6]. Core Views - Prudential announced a $2 billion share buyback plan, which is expected to enhance shareholder returns and stabilize market confidence amid concerns over slowing NBV growth [6]. - The company has a robust free surplus reserve of $8.5 billion, with a free surplus ratio of 242%, indicating a strong capacity for shareholder returns [6]. - The dividend policy remains stable, with an expected annual dividend increase of 7%-9% for 2024 [6]. - The target price is maintained at HKD 108.64 per share, with projected EPS for 2024-2026 at $0.87, $1.12, and $1.19 respectively [6]. Financial Summary - Revenue for 2023 is projected at $9.371 billion, with a growth rate of 9.6% [5]. - The net profit for 2023 is expected to be $1.701 billion, showing a significant recovery from previous losses [5]. - The PE ratio for 2023 is estimated at 16.18, indicating a more favorable valuation compared to prior years [5].

Business Performance and Growth - Prudential's new business profit grew by 45% in 2023, with a target compound annual growth rate (CAGR) of 15-20% from 2022 to 2027[10] - New business profit grew by 45% to $3.125 billion in 2023, exceeding the 37% growth in annual premium equivalent sales[46] - The company has set a target to achieve a 15% to 20% compound annual growth rate in new business profit from 2022 to 2027[47] - New business profit for the year reached $3.125 billion, showing significant progress towards the 2027 target of $4.4–5.4 billion[48] - Agency channel new business profit grew by 75% to $2.096 billion, driven by a 67% increase in annual premium equivalent sales and a 37% growth in health and protection products[50] - Bancassurance new business profit decreased by 8% to $793 million, primarily due to challenging market conditions in mainland China and Vietnam[50] - Hong Kong contributed 45% of new business profit during the period, with both new business profit and annual premium equivalent sales more than tripling compared to the previous year[50] - Adjusted IFRS operating profit for the year was $2.893 billion, an 8% increase compared to 2022 on a constant exchange rate basis[50] - The company's estimated shareholder surplus above the prescribed capital requirement was $16.1 billion as of December 31, 2023, with a coverage ratio of 295%[50] - Total dividend for 2023 increased by 9% to 20.47 cents per share, with a second interim dividend of 14.21 cents per share approved by the board[51] - The company aims to achieve a customer Net Promoter Score (NPS) in the first quartile for all 10 business units by 2027, with a customer retention rate target of 90%–95%[53] - Prudential has an average of 68,000 monthly active agents in Asia, with over 9,000 qualifying as Million Dollar Round Table (MDRT) members[54] - The company aims to increase monthly active agents and double the new business profit per agent by 2027, targeting 2.5 to 3 times the 2022 level[54] - In 2023, the average monthly active agents increased by 3%, and the new business profit per active agent rose by 59% to over $2,800[54] - Prudential generated over 4 million sales leads through its digital lead platform PruLeads, with an 8% conversion rate into new sales[54] - The company sold approximately 1 million new policies through bancassurance in 2023, with recurring premium policies contributing over 90% of the Annual Premium Equivalent (APE) sales[55] - Health and protection products from bancassurance partners grew by 26% in APE sales, accounting for over 7% of total APE sales in 2023[55] - Prudential extended its partnership with Vietnam International Bank until 2036, incorporating a market-first enhanced business quality control method[56] - The company integrated former Citibank businesses in four markets through its key strategic partner UOB, gaining access to an additional 2.4 million bank customers[57] - Prudential is developing advanced, market-specific, and sustainable health insurance products, including risk-based pricing models and value-added services[57] - The company is implementing AI-driven underwriting and claims processes to enhance customer experience and combat fraud[57] - Health insurance business recorded new business profit of $330 million in 2023, a 20% increase[58] - The company aims to double the new business profit of health products between 2022 and 2027[58] - The company plans to reduce the number of applications by more than half by 2027, starting with the launch of PruServices 2.0 Web in Malaysia in January 2024, which will eliminate 15 customer service applications[59] - The company successfully reduced monthly incidents by 60% and recovery time by 40% in 2023[59] - Generative AI (GenAI) reduced product inquiry time from over 4 minutes to under 30 seconds in one market, with ongoing testing in two additional markets[60] - AI technology reduced underwriting time for non-standard cases from 3 days to 1.5 hours and claims payment processing time from 1.29 days in 2022 to 0.45 days in 2023 at CITIC-Prudential Life Insurance[60] - The company plans to implement at least two high-value data analytics and AI use cases in each strategic pillar by the end of 2024[60] - The company is building a global tech product-centric team for customer and agency pillars, with plans to deploy similar teams for other business areas by the end of 2024[59] - The company is establishing an AI lab to foster innovation and attract external talent, aiming to integrate AI and analytics into the organizational culture[60] - The company is implementing a new performance and compensation model in 2024 to align individual and team goals with its strategy and values[61] - The company aims to achieve the first quartile employee engagement by 2027[62] - The company plans to enhance wealth management and investment capabilities through its asset management arm, Eastspring, and support top agents to better serve affluent clients[62] - Eastspring manages over $237 billion in assets across 11 markets, ranking in the top 10 in six of these markets[71] - The company's distribution platform includes approximately 68,000 monthly active agents and over 200 bank partners, with 10 being strategic partners[71] - The company's customer retention rate has reached 86%, positioning it well to increase lifetime wallet share from existing customers[68] - The company ranks in the top three in 10 out of 14 Asian life insurance markets and in the top five in 6 out of 8 African life insurance markets[69] - The company plans to expand its product range for high-net-worth individuals, including estate and retirement planning, and aims to hire 1,000 additional advisors for its Prudential Financial Advisers (PFA) team by 2024[63] - The company's sales continued to grow in the first two months of 2024, and it is confident in achieving its 2027 financial and strategic goals[66] - The company is implementing organizational changes to enhance skills, improve capabilities, and prioritize value creation across markets[65] - The company is focusing on product innovation to offer personalized financial solutions, including wealth accumulation, protection, inheritance, and retirement planning[62] - The company's effective insurance and asset management business generated $2.74 billion in operating free surplus in 2023, remaining stable compared to 2022[80] - European Embedded Value (EEV) new business profit increased by 45% (at constant exchange rates) to $3.125 billion in 2023, driven by strong growth in Hong Kong and 12 markets with double-digit growth[79] - The company aims for a compound annual growth rate (CAGR) of 15% to 20% in new business profit from 2022 to 2027, focusing on agency, bancassurance, and health products[75] - European Embedded Value (EEV) shareholder equity increased by 7% (at constant exchange rates) to $45.3 billion in 2023, supported by a 45% rise in new business profit[81] - Adjusted operating profit grew by 6% (at actual exchange rates) to $2.893 billion in 2023, driven by reduced central costs and higher profits from asset management subsidiary Eastspring[82] - The company achieved a 50% reduction in weighted average carbon intensity compared to the 2019 baseline, progressing toward its 2030 target of a 55% reduction[76] - Four business units achieved top-quartile Net Promoter Scores (NPS) in 2023, aligning with the company's goal to reach top-quartile NPS by 2027[74] - The company plans to reinvest cash flows from existing policies into new business, customer expansion, digital-enabled distribution, and health capabilities to drive compound growth[73] - The company's IFRS post-tax profit improved to $1.712 billion in 2023, compared to a loss of $1.005 billion in 2022, due to reduced investment losses from rising interest rates[82] - Adjusted shareholders' equity increased to $37.3 billion, up 6% from $35.2 billion in 2022, driven by a 7% increase in IFRS shareholders' equity and a 5% increase in contract service margin[83] - New business profit grew 45% to $3.125 billion, driven by strong performance in Hong Kong and a rebound in annual premium equivalent sales post-pandemic[84] - Group European Embedded Value (EEV) operating profit rose 17% to $4.546 billion, supported by higher new business profit from insurance operations and reduced central costs[85] - The embedded value operating return improved to 10% in 2023, up from 9% in 2022[85] - Embedded value reached $45.3 billion as of December 31, 2023, compared to $42.2 billion on a constant exchange rate basis in 2022[85] - Operating free surplus generated from in-force insurance and asset management businesses was $2.74 billion, remaining stable compared to the previous year[85] - New business investment increased to $(733) million in 2023, up from $(552) million in 2022, reflecting higher annual premium equivalent sales and business mix changes[85] - Health and protection products contributed 40% to new business profit, with a 34% growth, while savings products saw a 54% increase in new business profit[84] - The company implemented IFRS 17 for insurance contracts in 2023, resulting in a restatement of 2022 figures, including an $18 billion increase in shareholders' equity at the transition date[85] - The S&P 500 index rose 24%, while the MSCI Asia ex-Japan index increased 4%, and the Hang Seng Index declined 14% in 2023[84] - Adjusted operating profit under IFRS increased by 8% to $2.893 billion, driven by a 10% increase in profit from the asset management business, Eastspring, and reduced central costs[86][89] - Net profit after tax under IFRS improved to $1.712 billion in 2023, compared to a loss of $1.005 billion in 2022, primarily due to short-term interest rate fluctuations[86] - Shareholders' equity increased by 7% to $37.3 billion, with a 5% increase in contract service margin, contributing to a net increase of 9% in contract service margin[86] - The company's capital coverage ratio stood at 295% as of December 31, 2023, with an estimated surplus of $16.1 billion above the prescribed capital requirements[86] - Total dividends for 2023 increased by 9% to 20.47 cents per share, with the second interim dividend rising by 9% to 14.21 cents per share[87] - The company executed a $41 million share buyback in January 2024 to offset dilution from employee and agent share plans and plans further buybacks[87] - Insurance business adjusted operating profit remained stable, with a 36% increase in profit from CITIC-Prudential Life and an 8% increase in Indonesia[88][89] - Asset management business profit increased by 8% to $280 million, contributing to the overall growth in adjusted operating profit[88][89] - The company plans to deploy $1 billion in investments to enhance customer, distribution, health protection, and technology capabilities as part of its updated strategy[86] - The company's leverage ratio remained near the lower end of its target range at 20%, maintaining a strong financial position[86] - Adjusted contract service margin release for 2023 was $2.205 billion, a 3% decrease from $2.265 billion in 2022, with a release rate of approximately 9.5%, consistent with 2022[90] - Risk adjustment release increased to $218 million in 2023, up 22% from $179 million in 2022, reflecting stable non-market risk expirations[91] - Experience variance worsened to $(118) million in 2023, compared to $(66) million in 2022, primarily due to increased claims and expenses[91] - Net investment performance decreased to $1.241 billion in 2023, down 4% from $1.290 billion in 2022, impacted by lower asset values following adverse market movements in 2022[91] - Contractual service margin (CSM) increased by $3.911 billion in 2023, driven by $2.348 billion from profitable new business and $1.563 billion from discount unwinding, exceeding the $2.208 billion released to the income statement[93][94] - CSM growth rate was 5% in 2023, or 9% excluding economic and other variances and exchange rate impacts[94] - Central costs (excluding restructuring and IFRS 17 implementation costs) decreased by 19% in 2023, reflecting targeted headquarters cost reductions and benefits from redeeming a debt instrument[95] - Restructuring costs were $201 million in 2023, down from $293 million in 2022, primarily related to IFRS 17 implementation and regulatory measures[95] - Headquarters expenses totaled $(230) million in 2023, a decrease from $(277) million in 2022[95] - Net investment return and other items improved by $23 million in 2023 due to higher returns from the group treasury amid rising interest rates[95] - Non-operating items for the year included short-term fluctuations in investment returns of -$774 million (2022: -$3.404 billion) and costs related to corporate transactions of $22 million (2022: profit of $55 million)[96] - The adjusted operating profit effective tax rate for 2023 was 15% (2022: 20%), reflecting deferred tax assets from past losses and reduced headquarters costs without tax credits[97] - The total tax contribution for 2023 was $969 million, slightly lower than the $1.009 billion paid in 2022[98] - The group completed the sale of its remaining interest in Jackson for $273 million in cash, generating a gain of $8 million[101] - Shareholder equity increased from $16.7 billion at the beginning of 2023 to $17.8 billion at the end of the year, reflecting profits earned during the period[100] - New business profit under the European Embedded Value (EEV) basis increased by 43% to $3.125 billion in 2023[102] - Operating profit from insurance business under EEV basis increased by 8% to $4.904 billion in 2023[102] - The group's EEV shareholder equity increased to $45.25 billion at the end of 2023 from $42.184 billion at the beginning of the year[102] - The effective tax rate for total profit under IFRS was 18% in 2023 (2022: -55%), reflecting reduced investment losses without tax credits[97] - The group's IFRS adjusted shareholder equity increased to $37.346 billion at the end of 2023 from $35.211 billion at the end of 2022[101] - Annual Premium Equivalent (APE) sales increased by 34% to $5.876 billion, with new business profit rising by 43% to $3.125 billion[103] - The Group's European Embedded Value (EEV) operating profit increased by 17% to $4.546 billion, driven by a 9% rise in insurance business operating profit and a 10% increase in asset management operating profit[103] - New business profit from insurance operations surged by 45% to $3.125 billion, driven by growth in APE sales, partially offset by a 24% decline in in-force business profit to $1.779 billion[104] - Non-operating losses decreased significantly to $834 million in 2023 from $7.53 billion in 2022, primarily due to adverse equity market returns in Mainland China and Hong Kong, as well as lower interest rates and narrower credit spreads[104] - The Group's EEV shareholder equity increased to $45.3 billion as of December 31, 2023, up from $42.2 billion in 2022, with $41.5 billion related to insurance operations[104] - Greater China contributed 49% of the Group's total earned gross premiums and 60% of new business profit, with earned gross premiums at $12.859 billion and new business profit at $1.87 billion[106] - The Group aims to achieve a shareholder coverage ratio of over 150% of the prescribed capital requirements and plans to invest approximately $1 billion in core capabilities, including customer, distribution, health, and technology[107] - The Group expects to convert over $9 billion from the in-force business value and required capital into operating free surplus by the end of 2027, based on 2023 EEV assumptions[107] - Group free surplus increased by 3% to $1.395 billion in 2023, driven by lower central costs and restructuring expenses[110] - Insurance and asset management operating free surplus decreased by 8% to $2.007 billion, reflecting a 33% increase in new business investment costs[109] - New business investment costs rose by 33% to $733 million, in line with a 37% increase in annual premium equivalent sales[109] - Group free surplus at the end of 2023 stood at $12.455 billion, up from $12.229 billion at the beginning of the year[109] - Group regulatory capital surplus above the prescribed capital requirement was $19.0 billion, with a coverage ratio of 197%[113] - Group regulatory Tier 1 surplus above the minimum capital requirement was $12.4 billion, with a coverage ratio of 313%[113] - The company expects annual dividend growth of 7% to 9% for 2023 and 2024, with 2023 total cash dividends increasing by 9% to 20.47 cents per share[111] - Effective insurance and asset management operating free surplus remained stable at $2.740 billion, nearly unchanged from the previous year[109] - Central costs and write-offs, including interest on core structural borrowings and corporate expenses, decreased by 14% and 17%, respectively[109] - The company's capital resources totaled $38.6 billion, with Tier 1 capital resources at $18.3 billion as of December 31, 2023[113] - The company's estimated shareholder group regulatory capital surplus was $16.1 billion as of December 31, 2023, with a

Financial Performance - New business profit increased by 45% CER to $3.1 billion in 2023[14] - Operating free surplus generated from in-force insurance and asset management business reached $2.7 billion, up 1% CER[14] - Adjusted operating profit grew by 8% CER to $2.9 billion[14] - IFRS profit after tax was $1.7 billion, a significant improvement from a loss of $(1.0) billion in 2022[14] - New business profit grew by 45% to $3.125 billion in 2023, exceeding the 37% increase in APE sales[96] - Group adjusted IFRS operating profit for 2023 was $2,893 million, an 8% increase from 2022, with IFRS profit after tax at $1,712 million compared to a loss of $(1,005) million in 2022[110] - Business profit increased to $3.1 billion in 2023 from $2.1 billion in 2022[175] - EEV new business profit rose by 43% to $3,125 million in 2023 compared to $2,184 million in 2022[180][181] - Operating free surplus generation from in-force insurance and asset management business was $2,740 million in 2023, broadly flat compared to $2,760 million in 2022[184][186] - Adjusted operating profit grew by 6% to $2,893 million in 2023 from $2,722 million in 2022[190][191] - The company's total IFRS profit after tax improved to $1,712 million in 2023 from a loss of $(1,005) million in 2022[192] Market Position and Growth Opportunities - Prudential serves over 18 million customers across 24 markets in Asia and Africa[18] - Prudential holds top 3 positions in 10 Asian life markets and top 5 positions in 6 African life markets[25] - Greater China market presents significant growth opportunities with a population of 1.4 billion and a health and protection gap of $805 billion[64] - ASEAN markets have a combined population of over 600 million, with top three positions in eight out of nine markets[66][70] - India represents a compelling opportunity with a population of over 1.4 billion and 50% out-of-pocket health expenses[67] - Africa markets have a combined population of over 400 million with underserved insurance needs and high-growth potential[68] - Hong Kong benefits from Chinese Mainland visitors and domestic growth, with presence in all 11 cities of the Greater Bay Area[70] - Taiwan is the fifth-largest life insurance market in Asia Pacific, with Prudential as the top foreign player[64][70] - The company holds top three positions in 10 out of 14 Asian life markets and top five in six out of eight African markets[95] - The company holds top-three positions in 10 out of 14 Asian life markets and top-five positions in 6 out of 8 African life markets, with a large agency force and leading position in Asia bancassurance[165] Strategic Goals and Targets - The company aims for a 15-20% compound annual growth rate in new business profit between 2022 and 2027[16] - The company targets a 15-20% compound annual growth rate in new business profit from 2022 to 2027[102] - Operating free surplus from in-force insurance and asset management business was $2.74 billion in 2023, with a target to exceed $4.4 billion by 2027[104] - The company aims to grow new business profit at a CAGR of 15 to 20% between 2022 and 2027, driven by increased agency, bancassurance, and health new business profits, and double-digit CAGR growth in operating free surplus generation[174] - The company is on track with its 2027 objectives for new business profit and operating free surplus generation from in-force insurance and asset management business[200] Dividend and Shareholder Value - Second interim dividend of 14.21 cents per share, with total annual dividend reaching 20.47 cents per share, a 7-9% growth expected for 2024[38] - The 2023 total dividend increased by 9% to 20.47 cents per share, with a second interim dividend of 14.21 cents per share[112] Capital and Surplus - The company has a strong capital position with a 295% GWS shareholder coverage ratio over GPCR[26] - The Group's shareholder surplus was $16.1 billion at the end of 2023, with a cover ratio of 295%, reflecting a strong capital position[111] - EEV shareholders' equity increased by 7% to $45.3 billion in 2023 from $42.2 billion in 2022[187][188] - Adjusted shareholders' equity increased to $37.3 billion in 2023, up 6% from $35.2 billion in 2022[194][196] Health and Protection Business - Health new business profit grew by 20% to $330 million in 2023, with a target to more than double from 2022 levels by 2027[82][102] - The Group's health business contributed $330 million to new business profit in 2023, a 20% increase, with ambitions to double health new business profit by 2027[135] Agency and Bancassurance Channels - Agency channel new business profit increased by 75% to $2.096 billion, driven by a 67% growth in APE sales and a 37% increase in health and protection products[106] - Bancassurance channel aims to increase new business profit by 1.5 to 2 times from 2022 levels by 2027, targeting a penetration rate increase from 8% in 2022 to 9-11% by 2027[79] - Agency channel aims to more than double new business profit per agent, targeting a 2.5 to 3 times increase from 2022 levels by 2027[78] - Bancassurance new business profit fell 8% to $793 million in 2023, primarily due to challenging market conditions in China and Vietnam, but increased by 23% excluding these markets[107] - Average monthly active agents increased by 3% in 2023, with average monthly new business profit per active agent rising by 59% to over $2,800[120] - Bancassurance APE sales of health and protection products increased by 26% in 2023, representing over half of the policies sold through the channel[127] Investment and Asset Management - Prudential's Eastspring funds under management or advice totaled $129.2 billion in Singapore[21] - Eastspring, the investment arm, manages over $237 billion in assets across 11 markets[95] - Eastspring's funds under management and advice increased by 7% to $237.1 billion, driven by positive market movements and inflows from external clients and life business[109] - The company plans to enhance wealth and investment capabilities by leveraging Eastspring and its investment office, with a focus on product innovation and distribution support for top agents[147][148] - Eastspring manages over US$237 billion of assets and holds top-10 positions in six of its 11 markets, with plans to expand its product range and add a thousand additional advisors to its Prudential Financial Advisers (PFA) distribution force[168][154] Technology and Innovation - The number of monthly technology incidents decreased by 60%, and recovery times improved by 40% in 2023 due to investments in infrastructure and monitoring[139] - The company has finalized a new technology operating model, integrating technology talent across the business into a single team, with plans to deploy similar teams for other business areas by the end of 2024[140] - The company is accelerating the development of advanced, segment-specific health insurance products, including risk-based pricing and value-added services, with AI-enabled digitalization of underwriting and claims processes[140] - Advanced platforms have been developed to store key operational data, enabling the deployment of advanced analytics and AI, with a test run reducing product enquiry times from over four minutes to less than 30 seconds[141] - AI technology has been utilized to shorten underwriting of non-standard cases from three days to one and a half hours, and claims payment turnaround has been reduced from 1.29 days in 2022 to 0.45 days in 2023[142] - The company aims to deliver at least two high-value analytics and AI use cases per strategic pillar in 2024, with an AI lab being set up to foster innovation and attract external talent[141] Sustainability and ESG - New decarbonisation target to reduce carbon intensity of investment portfolio by 55% by 2030[42] - The company aims to achieve a 55% reduction in Weighted Average Carbon Intensity by 2030 compared to the 2019 baseline[175] Customer Retention and Engagement - The company has a retention ratio of 86%, with a focus on personalised targeting, segmentation by life stage, and tech-enabled journeys to grow its share of wallet with existing customers[163] Regional Performance - Hong Kong accounted for 45% of new business profits, with both new business profit and APE sales growing over three times compared to the prior year[108] - EEV new business profit increased by 45% on a constant exchange rate basis, driven by double-digit growth in 12 markets, particularly Hong Kong[183]

FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR Table of Contents As filed with the Securities and Exchange Commission on 26 March 2024 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended 31 December 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY ...

Investment Rating - The report maintains a "BUY" rating for Prudential Plc with a target price adjusted to HK$137.8, reflecting a potential upside of 81.9% from the current price of HK$75.75 [2][3]. Core Insights - Prudential reported a strong FY23 performance with new business profit (NBP) increasing by 45% year-over-year (YoY) to US$3.13 billion, surpassing consensus estimates by 6.4% [2]. - The NBP margin expanded by 3 percentage points to 53% for the full year, with a notable improvement in the second half of FY23, where the margin reached 57% [2]. - The board approved a full-year dividend of US$0.2 per share, indicating a 9% increase from FY22, and expects continued dividend per share (DPS) growth of 7%-9% in FY24 [2]. Summary by Sections Financial Performance - FY23 net profit was US$1.7 billion, a significant recovery from a loss of US$1.0 billion in FY22 [3]. - The adjusted operating profit for FY23 grew by 8% YoY to US$2.9 billion, driven by lower central costs and restructuring expenses [2][3]. - The Group's total assets increased to US$174.1 billion in FY23, with a projected growth to US$198.6 billion by FY24 [8]. Business Segments - Agency NBP surged by 75% YoY to US$2.1 billion, supported by a 37% growth in Health & Protections (H&P) and a 59% increase in agent productivity [2]. - The bancassurance segment saw a decline of 8% to US$793 million, primarily due to poor performance in China and Vietnam [2]. - The NBP of the China joint venture, CITIC Prudential Life, fell by 43% YoY to US$222 million, impacted by a 40% decline in APE sales [2]. Valuation Metrics - The stock is currently trading at a price-to-embedded value (P/EV) of 0.54x for FY24E, close to historical lows, reflecting concerns over China exposure and trading liquidity [2][3]. - The expected return on equity (ROE) is projected to improve from 9.8% in FY23 to 12.5% by FY26 [9]. - The dividend yield is anticipated to rise from 1.6% in FY23 to 2.7% by FY26 [9].

Investment Rating - Maintains an "Overweight" rating with a target price adjustment to HKD 108.64, corresponding to 0.77x P/EV for 2023 [2] Core Views - The company achieved a turnaround in net profit for 2023, driven by improved investment returns, with a net profit of USD 1.701 billion [2] - The dividend payout for 2023 was 20.47 cents per share, a 9% year-on-year increase [2] - The New Business Value (NBV) grew by 43% (actual exchange rate) and 45% (fixed exchange rate), with Hong Kong contributing 267% growth, accounting for 45% of the group's NBV [2] - Mainland China's NBV declined by 40%, primarily due to product pricing adjustments and challenges in the bancassurance channel [2] - The company expects further growth in Hong Kong and a turnaround in Mainland China to drive NBV growth in 2024 [2] Financial Highlights - Revenue/Insurance service income for 2023 was USD 9.371 billion, a 9.6% increase year-on-year [3] - Gross profit for 2023 was USD 1.712 billion, compared to a loss of USD 997 million in 2022 [3] - Net profit for 2023 was USD 1.701 billion, a significant improvement from a loss of USD 1.007 billion in 2022 [3] - The PE ratio for 2023 was 16.18, and the PB ratio was 1.54 [3] Business Performance - Hong Kong's annualized new premiums increased by 276%, with the agency channel contributing 70% of the growth [2] - Mainland China's annualized new premiums decreased by 40% (actual exchange rate) and 36% (fixed exchange rate) [2] - The company added 4,000 new agents in Hong Kong in 2023, supporting future growth [2] - In Mainland China, the agency channel's annualized premiums grew by 25%, with per capita policies and NBV increasing by 11% and 26%, respectively [2] Asset Allocation - The company's total assets were USD 156.120 billion at the end of 2023, with debt securities accounting for 53.2% of the portfolio [7] - Equity securities and collective investment plans made up 41.5% of the asset allocation [7] Operational Metrics - The post-tax operating profit for 2023 was USD 2.438 billion, a 12.2% increase year-on-year [8] - The embedded value (EV) at the end of 2023 was USD 45.250 billion, a 7.3% increase from the previous year [10]

Financial Data and Key Metrics Changes - Sales for the full year 2023 reached $5.9 billion, an increase of 37% year-on-year [6] - New business profits amounted to $3.1 billion, up 45% [6] - IFRS earnings were reported at $2.9 billion, reflecting an 8% year-on-year growth [6] Business Line Data and Key Metrics Changes - In Hong Kong, there was a strong rebound post-border reopening, with market share gains in both domestic and Mainland Chinese visitor segments [7] - The agency business in China grew by 25%, indicating a positive transition in product mix [8] - ASEAN markets showed strong performances, particularly in Malaysia and Indonesia, with Indonesia achieving four consecutive quarters of new business profit growth [8] Market Data and Key Metrics Changes - Hong Kong's GDP growth is projected at 3% to 3.5%, supporting optimistic growth prospects [16] - In China, the GDP is expected to grow at 5%, indicating a shift towards a more sustainable, consumption-led economy [19] - ASEAN countries contribute to 43% of the company's embedded value, highlighting significant growth potential in the region [32] Company Strategy and Development Direction - The company aims for 15% to 20% growth in new business profit by 2027, with a focus on organic, profitable growth and expanding distribution partnerships [9][10] - A strategic pivot in China towards a balanced product mix is expected to enhance growth prospects [20] - The company is actively seeking bank partnerships in ASEAN to complement existing distribution channels [32][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial objectives and noted measurable progress in strategy execution [9] - The demand for long-term savings and protection in China remains strong, despite challenges in the bancassurance segment [19] - The company is optimistic about the growth prospects in Hong Kong and ASEAN, with plans to expand market share [16][32] Other Important Information - The company has invested significantly in enhancing agency productivity and customer experience through technology and strategic talent sourcing [51] - Health business revenue grew by 20% in 2023, with plans to double by 2027 [54] Q&A Session Summary Question: Insights on Hong Kong and China performance - Management highlighted strong market share growth in Hong Kong and expressed optimism about the growth prospects in China, particularly in agency business [15][19] Question: Addressing low interest rates in China - Management discussed proactive measures taken to adjust product mix and pricing in response to the low interest rate environment [27] Question: Outlook for ASEAN markets - Management emphasized strong market positions in ASEAN and plans to expand distribution partnerships to drive growth [31][32] Question: Cash remittance and investment plans - Management indicated a cash remittance ratio of around 70% going forward and outlined plans for the remaining $900 million investment [62] Question: Health business growth strategy - Management detailed plans to manage health as a standalone business and target new value propositions to address health protection gaps [54][56]

(Incorporated and registered in England and Wales with limited liability, registered number 01397169) (Stock Code: 2378) The attached announcement is being released by Prudential plc on the date below. 20 March 2024, Hong Kong Executive Director Anil Wadhwani (Chief Executive Officer) PRUDENTIAL PLC FULL YEAR 2023 RESULTS: CONTINUING STRONG PERFORMANCE | --- | --- | --- | --- | --- | |-----------------------------------------------------------------------------------------|-----------------|-----------|---- ...

Core Insights - The number of fund liquidations is accelerating, with 47 public funds having been liquidated since the beginning of the year as of March 19, 2023 [1][2] - Over 1,000 funds are currently below the 50 million yuan threshold, indicating a significant number of "mini funds" facing potential liquidation [2][3] - The primary reasons for the increase in liquidations include declining market performance leading to reduced fund net values and increased investor redemptions [3] Fund Liquidation Trends - As of March 19, 2023, 47 funds have been liquidated, with 31 of these liquidations triggered by contract termination clauses due to net asset values falling below 50 million yuan [1][3] - The trend of fund liquidations began three years ago, with the number of liquidated funds exceeding 200 annually from 2021 to 2023, a significant increase from the 100 liquidations in 2019 and 2020 [2][3] Reasons for Liquidation - The overall decline in the stock market has led to significant reductions in fund sizes, prompting many funds to face liquidation [3] - The rise of "initiated funds," which require a minimum asset value of 200 million yuan after three years, has contributed to the liquidation trend, as many have failed to reach this threshold [3] Fund Company Responses - Fund companies are faced with the decision to either liquidate or "shelter" their funds, with many choosing to liquidate underperforming funds due to high maintenance costs [3][5] - Some companies attempt to "shelter" mini funds by increasing marketing efforts or using proprietary funds to boost asset values above the liquidation threshold [3][5] Case Study: Fund Sheltering - The example of the 工银中证消费龙头ETF illustrates the "sheltering" strategy, where the fund's net asset value fluctuated around the 50 million yuan threshold, requiring significant inflows to avoid liquidation [4][5]