Dahua Jixian: Lowering the target price of AIA Insurance (01299) to HK$100 and reaffirms the “buy” rating. VONB is expected to increase 13% year-on-year in the next quarter

The Zhitong Finance App learned that Dahua Jixian released a research report saying that since late May, the mainland has launched large-scale cross-border capital control, cracked down on illegal cross-border securities transactions and capital outflows, and included individuals in the foreign investment system supervision framework for the first time. The bank indicates that the market is overreacting to the potential impact of the new measures on AIA's (01299) mainland customer business (MCV). Under basic circumstances, it is not expected that a complete ban will occur, but some degree of tightening may occur. Maintaining the “Buy” rating, the target price was reduced from HK$109 to HK$100.

According to the report, due to the high base of mainland China and Hong Kong, the bank's new business value (VONB) increase is expected to slow to 13% year on year in the next quarter, while VONB is expected to rise 15% year on year in the first half of the year. The bank lowered AIA's VONB forecast for 2026-28 by 3.5%, 1.8% and 3.6%, respectively, to reflect a reduction in the Hong Kong market forecast and a 2.4% reduction in the after-tax operating profit forecast for this year to reflect the reduction in the net investment income forecast. The current low valuation is likely to attract some long-term investors. If AIA can maintain VONB's growth momentum in mainland China and other ASEAN markets and provide higher clarity on MCV sales, then the upcoming first-half year results will be an important catalyst for the valuation review.