[Event] AIA announced 2024 interim results: 1) NBV of 2.46 billion dollars, +25% (at a fixed exchange rate, same as below unless otherwise specified), of which NBV was +14.8% YoY (actual exchange rate) in Q24.

2) Annualized new premium (ANP) of 4.55 billion dollars, +17% year over year; of these, Q2 '24 was +5.6% year-on-quarter (actual exchange rate). 3) After-tax operating profit of 3.39 billion US dollars, +7% year-on-year; operating profit per share was +10% year-on-year; at the same time, the company announced the 2023-2026 after-tax operating profit target for a compound increase of 9%-11% per share. Net profit of $3.31 billion, +53% YoY. 4) The included value was 68.2 billion US dollars, +3% compared to the beginning of the year; the included value operating profit was 5.35 billion US dollars, +24% year over year; the included value operating return was +3.6 pct to 16.5% year over year. 5) The basic free surplus generated by 24H1 was $3.39 billion, +6% YoY. 6) An estimated mid-term dividend of HK44.5 HK cents per share, +5.2% YoY (actual exchange rate).

NBV in all regions: Major divisions and channels have achieved positive NBV growth, and NBV in Hong Kong continues to lead the way. 1) Hong Kong, China is the largest contributor within the group, with 24H1 NBV accounting for 33%, and NBV +26% to 0.86 billion US dollars. The local customer base and mainland visitor NBV were +28% and +24%, respectively. We expect Hong Kong, China will continue to experience high growth in the second half of this year, thanks to the recovery of the local customer base. 2) Mainland China NBV +36% YoY; of these, agent channels +20% YoY. The NBV of the three new 24H1 expansion branches was +44% year-on-year. We expect that one new branch will continue to be approved and prepared this year. 3) The “New Matai” region continued positive NBV growth of +27%, +14%, and +16%, respectively. 4) NBV in other regions remained stable, +9% year-on-year.

Product structure and value ratio: NBV Margin began to pick up. 1) The company's overall NBV margin was +3.3pct year over year to 53.9%. 2) Mainland China's NBV margin was +6.4pct to 56.6% compared to the same period last year. We believe it was mainly affected by the mainland's “integration of reporting and banking”, which led to a recovery in NBV margin in mainland China. 3) The NBV Margin in Hong Kong, China also picked up, up +8.8pct to 65.7% year over year. 4) Thailand/Singapore/Malaysia NBV Margin was +4.2pct/+1.5pct/-2.6pct to 93.1%/52.4%/64.2%, respectively.

Channels and manpower: The number of agents achieved double-digit year-on-year growth, and agent channels continued to increase; partner distribution channel NBV performed well. 1) The agent channel 24H1 NBV was +19% year-on-year, accounting for 71%, and the NBV margin was +4.4pct to 67.2% year-on-year. New agents were +22% year over year, and active agents were +6% year over year. Group MDRT members continued to lead the industry, with +20% year-on-year membership. Guided by the best agency strategy, we expect AIA MDRT members to continue leading the market in 2024. 2) Partner channels performed better, with 24H1 NBV +43% year-on-year; of these, banking insurance channel NBV was +61% year-on-year. Partner channel NBV share increased to 29%. NBV Margin was +4.2pct YoY to 41.7%.

Investment: The share of fixed income investment has declined, but it still dominates. 1) Fixed income was reduced, and the share of fixed income, equity, real estate, and others was -3.5pct/+4.4pct/+0.1pct/-0.9pct compared to the beginning of the year, respectively. 2) 24H1's annualized net return on investment was 1.8%, the same as the previous year. The unannualized return on total investment was 1.9%, -1.0pct year on year, mainly due to a sharp decline in the fair value of bonds and derivatives in the first half of the 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 Hong Kong, China, we are optimistic that AIA's performance will improve further. The current stock price corresponds to 1.09x2024E 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 comparable company valuations and the company's historical valuation, we give the company 1.5 x 2024E PEV, which corresponds to a reasonable 2024E value of 9.58 USD, or HK$74.74. Based on the absolute valuation method (assessed value method) and reference to comparable company valuations (including value multiples), we believe that the target price of the company is HK$87.43, 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.