Incident: AIA revealed 1H24 results, which were better than expected. 1H24 Company VONB (new business value, all not shown below are fixed exchange rates) 2.46 billion dollars/yoy +25% (expected +18%); annualized new premium 4.55 billion/ yoy +17%; VONB Margin (profit margin on new business value) 53.9% /yoy+3.3pct; profit from operations after tax (OPAT) 3.39 billions/yoy +7%; dividend per share of HK$0.445/yoy +5.2% (actual exchange rate) ).

Both volume and price increases in mainland China and Hong Kong, and Thailand's margin remains high. 1H24 AIA VONB 2.46 billions/ yoy +25%, including 2Q24 VONB 1.13 billion/ yoy +15%, VONB Margin 53.9%/yoy+3.3pct, is expected to be mainly due to the company's optimization of products and payment structures, as well as the reduction of scheduled interest rates in mainland China. The main contribution to VONB's growth comes from mainland China, Hong Kong, Singapore, etc. Specifically, the growth rate of VONB's performance in various markets: Mainland China/Hong Kong/Thailand/Singapore/Malaysia yoy +36%/+26%/+27%/+14%, respectively, with incremental contributions accounting for +39.3%/+38.4%/+6.9%/+10%/+2.8%, respectively. Among them, growth in mainland China is expected to be mainly due to increased demand for savings products and the integration of banking insurance and reporting banks driving margin increase (yoy +6.4pct, banking margin 41.3%), and institutional expansion contributions in new cities; Hong Kong's growth has benefited from contributions from mainland visitors, etc. Margin was differentiated by product restructuring in different regions. Mainland China/Hong Kong was 56.6%/65.7%, yoy+6.4pct/ +8.8pct; Singapore was 52.4%/yoy-12.6pct, which is expected to increase the share of savings products; Margin in other regions remained stable, with Thailand's margin as high as 93.1%, mainly due to high value investment insurance and critical illness additional insurance sales.

The quality of agents has improved, and the banking insurance channel VONB has grown rapidly. Agent channel: The 1H24 agent channel achieved VONB 1.86 billion US dollars/yoy +19%, mainly due to the increase in product margin and the sharp rise in team volume and price, including margin 67.2%/yoy+4.5pct; the number of active agents in the channel yoy +6%, and the agent production capacity yoy +22%. The company ranked first in MDRT for 10 consecutive years, highlighting the excellent quality of the agent team and the accumulation of high-quality teams, which is expected to guarantee VONB's steady growth. Multiple channels: The company insists on vigorously developing diversified channels. 1H24 partners distribute VONB 0.74 billion/ yoy +43%, including banking/independent financial advisors and brokerage channels VONB yoy +61%/+30%. Banking channels cooperate closely with Citibank, Bank of East Asia, Bank of Central Asia (Indonesia), China Post Savings Bank, etc., and VONB is expected to continue to improve with contributions such as continued deepening cooperation and integration of mainland newspapers and banks.

Operating profit per share increased 10% year over year, with steady growth in connotative value. On the OPAT side: In 1H24, the company achieved OPAT of 3.39 billion US dollars/yoy +7% (operating profit per share yoy +10%), the main contribution came from VONB growth leading to an increase in the marginal release of contract services; the mid-term dividend per share was 0.445 HKD/yoy +5.2% (actual exchange rate). The company attached great importance to investor returns and plans to pay 75% of free surplus to shareholders through dividends and repurchases. At the same time, it is clearly planned that OPAT's compound growth rate will be 9% to 11% in the next three years. Further improvement. In terms of implicit value: 1H24 achieved conjugated value equity of 70.86 billion US dollars/yoy +3% (yoy +5% per share), mainly due to VONB growth and positive operating and assumption changes. EV growth is expected to accelerate with subsequent contributions such as the Federal Reserve's interest rate cuts and prudent corporate assumptions.

Investment advice: Maintain the company's highly recommended rating. The volume and price of the company's agents and diversified channels have both increased, and premiums are expected to continue to grow with market development, etc., and Margin's value ratio is expected to remain stable under product strategy adjustments and structural optimization; at the same time, pressure on the company's investment side will gradually ease, and profits and dividends are expected to grow steadily. The growth rate of AIA VONB is expected to be +21.2%, +14.2%, and +11.3% in 24-26. The P/EV multiplier for the current stock price corresponding to 24-26E is 0.99/0.90/0.82 times.

Risk warning: Fluctuations in equity drag down investment, sales of new products fall short of expectations, and value ratios decline.