Core views:
The company issued a new business announcement for the first quarter: NBV was US$1.33 billion, +27% YoY (actual exchange rate, same below), and annual premiums of US$2.45 billion for new policies, +23% YoY.
The “sharp rise in volume and price”, combined with strong growth in partner distribution, drove the value of the new business to the highest level in a single quarter. In the first quarter, NBV was +27% (fixed exchange rate yoy +31%), and the NBV of all operating divisions of the company achieved double-digit growth, benefiting from a sharp rise in volume and price. Among them, new premiums were +23%. The personal insurance channel benefited from an increase in the number of active agents, while the banking insurance channel benefited from strong residents' demand for savings; in addition, NBVM was +1.9pct to 52.4% year-on-year. It is expected to increase the value rate mainly driven by the decline in processing fees and commissions in mainland China. Looking at sub-channels, the agency channel NBV achieved 20% growth, and partner distribution grew strongly by 70%.
Looking at all segments, the growth rate of business in mainland China and Hong Kong, China is accelerating. Benefiting from the continued growth of agents and banking insurance channels, and the company's addition of new customers through personal pension account products, AIA China's NBV increased 38% in the first quarter, and the increase in the beneficiary banking insurance value ratio drove AIA China's NBVM to 54.6%; AIA Hong Kong achieved 43% growth, and the local and MCV business contributed the same share of value; in addition, businesses in other regions also achieved strong business growth.
Optimizing capital management policies and increasing repurchases shows the company's confidence. The company uses 75% of the annual net free surplus as the target amount for dividends and repurchases, and regularly reviews the company's total capital resources (free surplus+qualified secondary debt capital and minimum capital). If it exceeds 200%, the return amount can be increased, and the company's repurchase amount is increased by 2 billion US dollars through the above two arrangements.
Profit forecast and investment advice: EPS for 24-26 is expected to be 0.62/0.68/0.84 USD/share, respectively. The EV valuation method is used to give the company a valuation of 1.6XPEV in 2024, with a corresponding reasonable value of HK$76.6 per share, giving the company a “buy” rating. (USD/HKD exchange rate = 7.83).
Risk warning. The growth rate of new orders was lower than expected, long-term interest rates declined, and the quality of agents fell short of expectations.