Incidents:

In the first half of 2024, AIA's operating profit after tax was $3.39 billion, +7% (fixed exchange rate)/+3.5% (real exchange rate, all not specified below); net profit to mother of $3.31 billion, +53% (fixed exchange rate)/+47.3%; new business value of $2.46 billion, +25% (fixed exchange rate)/+21.0%; inclusive value of $68.25 billion, +1.2% per share; interim dividend of 0.45 per share HKD, +5.2% YoY.

Comment:

The “sharp rise in volume and price” drove the value of new businesses +25% year-on-year (fixed exchange rate). In the first half of 2024, the company achieved a new business value of 2.46 billion US dollars, +25% (fixed exchange rate)/+21.0%. Among them, the 24Q1/Q2 single quarter was +26.9%/+14.8%, respectively. The overall growth trend continued. The overall growth trend continued. The slowdown in growth in the second quarter was mainly affected by the high base for the same period last year. Specifically, the new annualized premium for the first half of the year was 4.55 billion US dollars, +14.1% year-on-year, of which 24Q1/Q2 were +22.6% year-on-year, respectively; the value rate of the new business recorded 53.9% in the first half of the year, +3.1 pct year on year, mainly due to product structure optimization and product repricing.

VONB grew strongly in the Hong Kong and Mainland China markets, contributing more than 60% in total value.

1) The mainland China market benefited from a 20% increase in the value of new business from the best agency channels (fixed exchange rate) and a significant increase in the value of new business in the banking insurance channel. 24H1's new business value increased by 30.1% year on year to 0.78 billion US dollars. Among them, the value ratio of new business increased 6.3 pct to 56.6% year on year, mainly due to improved product structure, lower fixed interest rates, and the implementation of “integrated reporting” in banking insurance channels. Furthermore, in the first half of the year, AIA China successfully launched business in three new cities in Sichuan and Hubei provinces, and the value of new businesses in the newly expanded regions increased by 44% (fixed exchange rate).

2) Under the joint impetus of local business and MCV business (24H1 new business value increased by 28%/24% respectively at a fixed exchange rate), 24H1's new business value increased 26.0% year over year to 0.86 billion US dollars, making it the segment that contributed the most to the Group's new business value (accounting for 32.7% in each market). Among them, new products drove the new business value rate to increase 8.8 pct to 65.7% year over year.

3) New Matai and other markets: The value of the new 24H1 Thailand/Singapore/Malaysia business was 0.36/0.22/0.18 billion US dollars respectively, +9.8%/+26.6%/+7.6%, respectively, mainly due to the good performance of agent and partner distribution channels; the value of new business in other markets increased 5.7% year-on-year to 0.22 billion US dollars.

Both agent and partner distribution channels performed well, and the value of new business was +15.3%/39.5% year-on-year, respectively. The “best agent” is one of the company's core competitive advantages and the most important channel driving the company's value growth. This year, AIA once again became the multinational company with the number of members in the million round table in the world (for 10 consecutive years). In the first half of the year, the new business value of the company's agency channel increased 15.3% year over year to 1.86 billion US dollars. At the same time, the company also adopted diversified distribution strategies to reach more potential customers through partner distribution channels. The value of the new business increased by 39.5% to 0.74 billion US dollars in the first half of the year, including banking insurance channel+ 61% (fixed exchange rate).

Operating profit increased steadily, and target guidance showed confidence. In the first half of 2024, the company achieved net profit of 3.31 billion US dollars, +53% (fixed exchange rate)/47.3% year-on-year, mainly due to a decrease in net financial expenses on insurance contracts. Excluding short-term investment fluctuations, etc., the company achieved an after-tax operating profit (OPAT) of 3.39 billion US dollars in the first half of the year, +7% (fixed exchange rate)/3.5% year over year, mainly benefiting from CSM's release of +10% (fixed exchange rate). At the same time, the company announced the 2023-2026 OPAT compound growth target of 9%-11% (fixed exchange rate) per share, demonstrating business confidence.

Profit prediction and rating: AIA has a broad presence in 18 major markets in the Asia-Pacific region. It has rich international business experience, strong strength, clear channel and customer base strategic positioning. It is rooted in Hong Kong, China, where the life insurance market is mature, and continues to expand the mainland China market, which still has a low penetration rate and huge potential for growth. AIA has ranked first in the number of one million roundtable members in the world for 10 consecutive years, and has established long-term strategic partnerships with many large multinational banks and leading local banks in various markets to reach a wider range of customer groups and achieve complementary advantages. In the future, with the joint promotion of high-quality agents and excellent partner distribution channels, it is expected that new business value will continue to be unleashed. We maintain the company's 2024-2026 net profit forecast of $4.8/5.6/6.3 billion, respectively. The current stock price corresponds to the company's 24-26 PEV of 1.12/1.06/0.98, maintaining a “buy” rating.

Risk warning: Policy reforms fall short of expectations; capital markets fluctuate greatly; premium income falls short of expectations.