The Zhitong Finance App learned that UBS released a research report stating that it gave AIA (01299) a “buy” rating, with a target price of HK$96.

The bank said that in terms of UBS's investment theory in Asia, the company promised to complete the current repurchase target, and indicated that it would generate 75% of the net annual free surplus to give back to shareholders through dividends and repurchases. According to AIA, the net annual free surplus generated is largely affected by the erosion of actual free surpluses and new contract surpluses. Actual free surplus growth is mainly driven by multiple re-businesses. The erosion of new contract surpluses has a positive relationship with the value of the new business, but depends on capital consumption, product and geographical mix.

The report quoted AIA as saying that in addition to share buybacks, the company seeks to improve the overall return on equity by generating profitable new businesses, reducing risk by using financial instruments, selling low return on share capital, and optimizing the capital structure. Furthermore, AIA also revealed that recruitment of agents for local and mainland tourist departments is progressing well, and demand for mainland tourist insurance is still strong. Regarding capital flow supervision risks, AIA indicated that the premiums for mainland tourists are very small compared to China as a whole, and that the premium payments for mainland tourists come from Hong Kong bank accounts. Even though regulators recently investigated individual brokers, there was no significant impact on the rest of the company's brokerage business.