Goldman Sachs: Raises AIA (01299) target price to HK$96, reiterates "Buy" rating.

Goldman Sachs released a research report stating that AIA (01299) stock price has risen by 62% since last year, currently trading at 1.4 times the forecasted future one-year stock price to intrinsic value, reaching a new high since 2023, but still below the average of 1.7 times from 2013 to 2023. The bank has raised its target price for AIA from HK$85 to HK$96, equivalent to 1.4 times the forecasted intrinsic value in 2027, and reiterated a "buy" rating. The bank mentioned that AIA's valuation has been supported by steady compound growth in new business value, intrinsic value, and after-tax operating surplus. The bank reevaluated key growth indicators for AIA, noting that while premium income growth has slowed down, intrinsic value growth has recovered and is on the rise. From 2011 to 2019, the annual growth of new business value averaged 24%, compared to the bank's estimated average growth of about 15% for the company from 2023 to 2028. However, it is expected that the operational return rate on intrinsic value will reach 15% in 2025, maintaining the fastest growth momentum seen in the 2018-19 fiscal year, and is expected to continue to rise. In addition, the company's share buybacks using free cash flow have resulted in a return on equity significantly higher than historical levels, expected to reach 17% between 2023 and 2028. The bank believes that AIA's compound growth story remains valid, despite concerns from investors about the increasing proportion of savings products in the mainland and Hong Kong markets, which they believe are already reflected in the valuation. The current valuation risk-return ratio is attractive. The bank has raised its forecast for new business value for AIA in 2025-2027 by 3-4%, and increased its net profit forecast for 2025 by 5%, mainly reflecting the stock market performance in mainland China and Thailand.