JP Morgan: AIA (01299) receives an "overweight" rating, expected to benefit from the US interest rate cuts and weak US dollar.
Morgan Stanley estimates that a 100 basis point change in interest rates will result in a sensitivity of 7% for Yu An Insurance's pre-tax profit and 1% for shareholders' equity in the 2023 fiscal year.
JPMorgan released a research report stating that AIA (01299) has a "buy" rating, believing that the company seems to be undervalued. The company is a major beneficiary of the Fed rate cuts and the weakness of the US dollar, as the company's balance sheet is heavily exposed to the US dollar (including the Hong Kong dollar).
The bank estimates that a 100 basis points interest rate change will result in a sensitivity of 7% and 1% in AIA's pre-tax profit and shareholder equity for the fiscal year 2023. In addition, based on information disclosed by AIA, a 5% depreciation of the US dollar (i.e. appreciation of local currencies) means a sensitivity of 2% and 3.5% in Embedded Value (EV) and New Business Value (NBV) respectively.
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