The Zhitong Finance App learned that Haitong Securities released a research report saying that it continues to be optimistic about AIA China's development potential and gives AIA Insurance (01299) a “superior to the market” rating. The reasonable value range is HK$82.97-86.71. With the development of new branches in mainland China and strong growth in the ASEAN region, the bank is optimistic that AIA's performance will improve further. The current stock price corresponds to 1.29x2024EPEV. The bank believes that the current valuation is undervalued and the margin of safety is high.

Haitong Securities's main views are as follows:

The company announced a summary of new business for the first quarter:

1) NBV US$1.33 billion, +31% YoY (according to fixed exchange rate, same below); NBVMargin 54.2%, +2.1pct YoY. 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.

Capital management policies have been optimized to continuously provide shareholders with capital returns

1) Using 75% of the net free surplus generated in the year as the target payment rate, capital will be returned to shareholders every year through dividends and share repurchases starting with the 2024 full year results. Taking 2023 as an example, the net free surplus for the full year is US$3.9 billion. Calculated at a target payment rate of 75%, it can return US$2.9 billion in capital to shareholders, including annual dividends 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 US dollars was added to the existing repurchase plan, bringing the total to 12 billion US dollars. The additional 2 billion US dollars of repurchase is expected to be completed within 12 months.

Regional NBV:

NBV in all reporting segments achieved double-digit growth; partner distribution channels NBV increased +70% YoY, AIA China and AIA Hong Kong NBV +38% and +43% YoY; all ASEAN divisions achieved double-digit growth. The bank believes that with strong demand for savings products, AIA China will maintain rapid positive NBV growth this year, and is 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 NBVMargin is 54.6%, +1.9pct year over year; of these, the agent channel NBVMargin is about 60%, and the banking insurance channel NBVMargin is about 40%. 2) AIA Hong Kong NBvMargin 64.3%, +6.2pct year over year. 3) The bank believes that whether looking at the group as a whole or AIA China and AIA Hong Kong divisions, the downward trend of NBVMargin has improved markedly, and it is expected that NBVMargin will bottom up this year.

Channels and manpower:

1) The number of new agents and active new agents in AIA China 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.

Risk warning: Long-term interest rates are trending downward, equity markets fluctuate, and premiums continue to be under pressure.