JP Morgan: The uncertainty surrounding mainland visitors to AIA (01299) has been reflected, attention shifts to growth.

JPMorgan Chase released a research report stating that AIA (01299) stock price has fluctuated significantly in the past two weeks, dropping by 7.5% (compared to a 2.2% drop in the Hang Seng Index), mainly due to concerns in the market about tightening cross-border regulations. The bank believes that although risks related to Mainland China visitors (MCV) may persist for some time and bring uncertain factors, they are already largely reflected in the stock price. The recent share price decline has triggered investors to reevaluate risk-return, with the stock currently trading at 1.1 times the forecasted price-to-book value (P/EV) for 2027, near historical lows, reflecting limited value market has assigned to its future growth and appearing overly conservative. JPMorgan Chase reiterated its overweight rating on AIA and maintained a target price of HK$112. JPMorgan Chase stated that the market focus is no longer on whether the risk of Mainland China visitors exists, but rather on whether the market is underestimating the broader growth and cash generation capability of the insurer. As the Mainland China visitor business only accounts for 21% of the group's new business value, the remaining 80% of non-Mainland China visitor business is largely on track. The bank expects the non-Mainland China visitor business to achieve double-digit financial growth supported by diversified market positioning and robust demand in major Asian life insurance markets. Additionally, India has become an important long-term growth engine for the group, with Tata AIA exceeding US$1 billion in new life insurance sales (APE) in 2025; considering AIA's 49% stake, its scale is comparable to the market opportunity of Hong Kong Mainland China visitors. The bank maintains forecasted year-on-year growth rates of 10% and 12% for AIA's post-tax operating profit in the fiscal years 2026 and 2027, respectively. While JPMorgan Chase is relatively more optimistic about China Life Insurance (02628) and Ping An Insurance (02318) in its "overweight" list ahead of the summer earnings season, the historically low valuation of AIA should limit its downside stock price potential.