HTSC·2024-07-28 08:02Investment Rating - The report maintains a "Buy" rating for AIA Group with a target price of HKD 90.00 [20]. Core Insights - AIA Group achieved strong growth in 2023, setting a resilient growth base for 2024. The new business value (NBV) is expected to grow by 22% year-on-year in 1H24 at actual exchange rates, despite a high growth base from the previous year [1][17]. - Operating profit after tax (OPAT) is projected to grow by 2% year-on-year (AER) in 1H24, with a significant rebound in earnings per share (EPS) expected to increase by 6% due to share buybacks [1][53]. - The report adjusts the EPS forecast for 2024-2026 to USD 0.41, 0.54, and 0.61, down from previous estimates of USD 0.44, 0.60, and 0.70, respectively [1]. Summary by Sections Financial Performance - AIA Group's gross premium income is projected to increase from USD 16.319 billion in 2022 to USD 19.150 billion in 2024, reflecting a growth rate of 9.34% [54]. - The net profit attributable to shareholders is expected to rise from USD 3.331 billion in 2022 to USD 4.561 billion in 2024, indicating a growth of 21.16% [54]. - The report anticipates a recovery in OPAT growth, projecting a 6% increase in 2024, with 1H24 and 2H24 expected to grow by 4% and 7% respectively [53]. Valuation Methodology - The valuation is based on a three-stage discounted cash flow (DCF) model, incorporating both accounting metrics and embedded value metrics [56]. - The target price of HKD 90 is derived from an average valuation using the book value method (HKD 66) and the embedded value method (HKD 114) [39]. Market Outlook - The report highlights that the Greater China region remains a primary source of growth for AIA Group, with strong performance in both mainland China and Hong Kong markets [35]. - The anticipated return of OPAT to positive growth is supported by a rebound in NBV, which had previously faced declines [53].