NBP beat driven by better 2H margin; expect FY24 DPS to continue growing by 7%-9%

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$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$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$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$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].