Citi: AIA (01299) new business value growth slightly lower than expected, buyback higher than expected, rating "Buy"

Citibank released a research report stating that AIA (01299) performance in 2025 is roughly in line with expectations, with the stock buyback bringing surprises. They rated it as "buy" with a target price of 103 Hong Kong dollars. Calculated at actual exchange rates and fixed exchange rates, the new business value is expected to increase by 17% and 15% to 5.516 billion US dollars in 2025, slightly lower than the market's expectation of 18% growth calculated at actual exchange rates. This growth is mainly driven by a 10% increase in annualized new premiums and a 3.4 percentage point increase in profit margins. According to market segmentation, the growth in new business value is driven by the markets of Hong Kong, Thailand, and Singapore, with increases of 28%, 22%, and 17% respectively in 2025, while mainland China and other markets are expected to grow by 2% and 4% respectively. Citibank points out that AIA's embedded value is expected to expand by 11% to 76.8 billion US dollars (per share embedded value increasing by 14% to 7.31 US dollars) in 2025, with net free surplus growth of 11% to 4.5 billion US dollars. In addition to distributing a total of 2.6 billion US dollars in dividends, the company announced a new 1.7 billion US dollar share buyback, significantly higher than the bank's expectation of 1.3 billion US dollars. Earnings per share growth in operating profit for 2025 and the second half of 2025 are expected to increase by 13% and 10% respectively compared to the previous year, slightly higher than the market's expectation of 12% growth in 2025. The final dividend was raised by 10% to 1.44 Hong Kong dollars per share, and the total dividend for 2025 was raised by 10% to 1.93 Hong Kong dollars per share, slightly higher than the market's expectation of 9% growth.