The Pacific Securities has released a research report initiating coverage on AIA (01299) with a "Buy" rating. The firm projects the company's revenue for 2025-2027 to be $33.178 billion, $35.139 billion, and $37.447 billion, with net profit attributable to shareholders estimated at $6.367 billion, $7.055 billion, and $8.013 billion respectively. The forecasted book value per share is $4.26, $4.70, and $5.17, corresponding to a PB valuation of 2.18, 1.97, and 1.79 times the closing price on October 20. AIA maintains a strong position in the Asian life insurance market, with robust growth in Hong Kong and Thailand, improvement in margins in mainland China, and sustained high growth in emerging markets such as ASEAN and India.
Key points from The Pacific Securities include the following: AIA published its mid-year performance report for 2025, achieving an after-tax operating profit of $3.609 billion, an increase of 6% year-on-year; net profit attributable to shareholders was $2.534 billion, up 23.5% year-on-year; and new business value grew 14% year-on-year to $2.838 billion, with profit margin for new business value rising 3.4 percentage points to 57.7%. Free surplus stood at $3.569 billion, a 4% increase, and embedded value reached $70.853 billion, up 2.6% from the beginning of the year.
The new business value shows solid growth with regional support. In the reporting period, new business value in the Hong Kong market increased by 24% to $1.063 billion, with a 15% increase in new agents and a 25% rise in active new agents. New business value from agents surged by 35%, with the agent channel accounting for over 70% of new business value. The company saw a 10% rise in new business value from partner distribution, driven by the outstanding performance of East Asia Bank. In mainland China, new business value reached $743 million, growing 10% year-on-year when excluding the impact of economic assumptions, with the profit margin increasing to 58.6%. The Thailand market surged 35% to $522 million, benefiting from one-off sales prior to new regulations. The Singapore market grew by 16% to $259 million, while other markets collectively expanded by 14% to $249 million.
Annualized new premiums grew by 8% to $4.942 billion, and the improvement in new business value margin indicates significant success in optimizing regional and product structures. Channel structuring has improved, with synergy between agency and bancassurance channels driving new business value growth of 17% to $2.22 billion, with the total number of agents surpassing 1.1 million and production capacity continuing to improve. New business value from bank and partner channels grew 8% to $804 million, with strong performances from Thailand, Malaysia, and Hong Kong. The company deepened partnerships with leading regional banks such as Bangkok Bank, Public Bank, and Citibank, expanding its reach into the high-net-worth and cross-border client markets, thereby enhancing channel balance and value contribution.
AIA's profitability and capital strength remain solid, with ample cash flow. The operation profit from embedded value stood at $5.893 billion, a 9% increase year-on-year, with an annualized return rate of 17.8%. After-tax operating profit reached $3.609 billion, representing a 6% growth, and the operating return rate to shareholders' equity was 16.2%. The basic free surplus increased by 4% to $3.569 billion; net free surplus grew by 13% to $2.430 billion. The company declared an interim dividend of 49 Hong Kong cents per share, a 10% increase year-on-year, and returned $3.710 billion to shareholders through dividends and share buybacks. By the end of June, the shareholder equity ratio was 219%, maintaining a strong level.
Risk warnings include significant fluctuations in capital markets, slower-than-expected reform progress, and substantial currency volatility.
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