[Incident] AIA announced a summary of new business for the first quarter: 1) NBV of US$1.33 billion, +31% year over year (according to fixed exchange rate, same below); NBV Margin 54.2%, +2.1pct year on year. 2) Annualized New Premium (ANP) of $2.45 billion, +26% 3) An additional $2 billion was added to the existing $10 billion repurchase plan, bringing the total to $12 billion. The additional $2 billion repurchase is expected to be completed within 12 months.
The capital management policy has been optimized to provide shareholders with a continuous return on capital 1) The target payment rate is 75% of the net free surplus generated each year. Starting with the full year results in 2024, capital will be returned to shareholders every year through dividends and share repurchases. Taking 2023 as an example, the full year's net free surplus of US$3.9 billion, based on a target payment rate of 75%, can return US$2.9 billion in capital to shareholders, including a full year dividend of US$2.3 billion and share repurchases of US$600 million. 2) The company will regularly check the capital situation and promptly return more capital than required to shareholders. With the approval of the board of directors, an additional $2 billion was added to the existing repurchase plan, bringing the total to $12 billion. The additional $2 billion repurchase is expected to be completed within 12 months.
NBV by region: NBV in all reporting segments achieved double-digit growth, partner distribution channels NBV +70% YoY, AIA China and AIA Hong Kong NBV +38% and +43% YoY; all ASEAN divisions achieved double-digit growth. We believe that with strong demand for savings products, AIA China will maintain rapid positive NBV growth this year, and we are optimistic about the continued strength of AIA's China agent channel and the new growth points brought by the banking insurance channel.
Product structure and value ratio: 1) AIA China's NBV margin was 54.6%, +1.9pct year over year; of these, the agent channel NBV margin was about 60%, and the banking insurance channel NBV margin was about 40%. 2) AIA Hong Kong NBvMargin 64.3%, +6.2pct YoY. 3) We believe that whether looking at the Group as a whole or AIA China and AIA Hong Kong divisions, the downward trend of NBV Margin has improved markedly, and NBV Margin is expected to bottom up this year.
Channels and manpower: 1) The number of new agents hired by AIA China and the number of active new agents both increased by more than 20%.
2) AIA Hong Kong experienced strong growth in the number of newly hired agents. 3) The number of new AIA Singapore agents was +14% year over year, and the number of active new agents was +20% year over year.
Continue to be optimistic about the development potential of AIA China, with an “superior to the market” rating. With the development of new branches in mainland China and strong growth in the ASEAN region, we are optimistic that AIA's performance will improve further. The current stock price corresponds to 1.29x 2024E PEV. We believe that the current valuation is undervalued and the margin of safety is high. The company enjoys a valuation premium compared to peers. Referring to the comparable company valuation range and the company's historical valuation range, we give the company 1.70 x 2024EPEV, which corresponds to a reasonable 2024E value of 10.64 USD, or HK$82.97. Based on the comprehensive absolute valuation method (assessed value method) and reference comparable company valuation (including value multiples), we believe that the reasonable value range for the company is HK$82.97-86.71, giving it an “superior to the market” rating.
Risk warning: Long-term interest rates are trending downward, equity markets fluctuate, and premiums continue to be under pressure.