CMB International: AIA (01299)'s new business value is expected to slow year-on-year in the third quarter to maintain a “buy” rating with a target price of HK$112

The Zhitong Finance App learned that CMB International released a research report stating that AIA (01299) will announce the third quarter results before the Hong Kong stock market opens on October 30. CMB International slightly lowered the value growth forecast for AIA's new business from 2026 to 2028 to 10%, 12%, and 12%, compared to the previous forecasts of 12%, 13%, and 12%, respectively. The bank maintained a “buy” rating, and the target price remained unchanged at HK$112, corresponding to 1.7 times the included value ratio of the 2026 forecast stock price.

The bank expects the value of the company's new business to drop 4% or 3% year-on-year in the third quarter (based on fixed exchange rates and actual exchange rates, respectively), or the weakest single-quarter performance since 2023, mainly dragged down by the high base of AIA China and Hong Kong markets for the same period last year. The bank expects the value of the company's new business to increase by 7% or 8% year-on-year in the first nine months of 2026 (based on fixed exchange rates and actual exchange rates, respectively).

The bank believes that the slowdown in new business value growth in the third quarter may be a quarterly disturbance, and there has been no significant slowdown in business momentum for visitors from mainland Hong Kong. Considering the low base in the fourth quarter, the bank expects the new business value growth rate to pick up.

By region, the bank expects AIA China's new business value to drop 20% year-on-year at a fixed exchange rate in the third quarter, mainly due to stricter banking insurance channel regulations, continued intense competition, and anticipated demand due to the reduction in scheduled interest rates on September 1, 2025. AIA Hong Kong's new business value for the third quarter is expected to drop 3% year-on-year at a fixed exchange rate. The high base figure for the same period last year mainly affects annualized new policy premiums, and the profit margin for new business value is basically stable from month to month. The value of AIA Thailand's new business in the third quarter is expected to drop 2% year-on-year at a fixed exchange rate, which is also affected by the high base for the same period last year. The value of AIA's new business in the third quarter in Singapore and Malaysia is expected to increase 14% and 12% year over year, respectively, at fixed exchange rates, while TATA AIA in the Indian market is expected to increase 11% year over year.

The bank pointed out that southbound capital has become an important support for AIA's stock price in the past two months. According to data from the Hong Kong Stock Exchange, Southbound Capital's shares in AIA rose from 2.97% at the end of August to 3.93% at the end of September, and further rose to more than 4% after National Day Golden Week, reaching 4.63% as of October 15, a record high. The bank believes that the southbound capital inflow is expected to provide long-term support for stock price performance.