AIA Earnings: VNB Growth in Line, Higher OPAT Growth Guidance Supports Upward Re-Rating

We retain our fair value estimate of HKD 96 following AIA’s respective interim 21% and 47% year-on-year growth in value of new business, or VNB, on an actual currency basis, and net profit. The results are on track to deliver our full-year growth projections at 19% and 48% in VNB and net profit, respectively. Positively, management lifts operating profit after tax, or OPAT, per share growth target to 11% from 9% from 2023 to 2026. Though the stronger-than-expected guidance lifted AIA shares by 5.6% on Aug. 22, the stock is still trading at a historical low 1.1 times 2024 embedded value equity per share. Shares have declined 23% year to date as investors remain worried about macroeconomic headwinds including depreciating local currencies, stock market volatility, and falling interest rates in China that hamper growth in embedded value and VNB in 2024.