Goldman Sachs: Reduced AIA's (01299) target price to HK$96 to maintain “buy” rating

The Zhitong Finance App learned that Goldman Sachs released a research report saying that the recent stock price of AIA Insurance (01299) has reflected structural disruptions in MCV sales. The slowdown in growth is expected to be temporary, attracting risk and return. The company's 12-month target price was lowered from HK$97 to HK$96, maintaining a “buy” rating. In AIA's first-half results, Hong Kong's sales performance fell short of expectations, mainly affected by the high base effect of the Mainland Visitor (MCV) business, while the local business showed strong growth momentum. The bank believes that the impact of the high base has been fully anticipated, and the short-term focus of the market will be on the third quarter results, as the first data point for investors to evaluate the impact of various regulatory announcements on customer demand.

The bank is encouraged by the quarterly improvement in the MCV business's new business value (VONB) (compared to the first quarter). However, due to the more challenging high base effect in the second half of the year, the bank lowered its sales forecast and expected Hong Kong VONB to only record low unit growth in the second half of this year. The bank emphasized that Hong Kong's structural growth is still intact, with VONB's compound annual growth rate reaching 18% from 2023 to 2026, and expects Hong Kong to return to double digit growth in the 2027 fiscal year. Goldman Sachs lowered its 2026-2028 VONB forecast by 2% to 3% in response to the updated performance forecast for the first half of the year, mainly reflecting weak sales in Hong Kong, partially offset by strong momentum in the ASEAN market; and lowered its book value forecast by 5% to 7% for the 2026-2028 fiscal year due to unrealized losses in the bond portfolio.