Credit Suisse: Maintains "buy" rating on AIA (01299) with a target price of 90 Hong Kong dollars.

UBS released a research report stating that it maintains a "buy" rating for AIA (01299) with a target price of HK$90. The current valuation is attractive (forecasted stock price is 0.97 times the intrinsic value). It is expected that the shareholder return in the next two years will be 8.2% (including dividend yield of 3.2% and share buyback of 5%) and 5.5% (including dividend yield of 3.5% and share buyback of 2%). After the company announced its interim performance, UBS conducted a non-deal roadshow for AIA in the Asia region (including Singapore, mainland China, and Hong Kong). Most investors seem satisfied with the company's stable performance in the first half of this year, with the new business value (NBV) increasing by 25% year-on-year at fixed exchange rates and after-tax operating profit up by 10% compared to the same period last year. Investors also appreciate AIA's efforts to meet their needs, such as providing the first per-share after-tax operating profit guidance with a compound annual growth rate of 9 to 11% from 2023 to 2026 on a fixed exchange rate basis, and believe that the targets have been stress tested. Additionally, AIA outlined a strengthened capital management framework (with a 75% target net FSG payment goal and the return of excess capital after regular reviews). UBS points out that AIA China has a differentiated positioning that allows it to navigate economic cycles. Furthermore, compared to domestic peers, AIA China's intrinsic value has a relatively lower interest rate sensitivity. In terms of geographical expansion, it is expected that AIA will accelerate the establishment of branches in the remaining time of 2024 (i.e. more than one branch). Due to weak performance in Asian stock markets since the second quarter and increasing regulatory scrutiny, investment assumptions by actuaries have become more cautious. In other words, stock market returns are not the only determining factors for intrinsic value and after-tax profit. The favorable interest rate trends and exchange rate changes in the second half of the year are expected to benefit the trend of intrinsic value this year.