Dahua Jixian: Lower AIA (01299) target price to HK$100, reiterate "buy" rating, expect VONB to increase by 13% year-on-year in the second quarter.

Dahua Jixian released a research report stating that mainland China has launched a large-scale crackdown on cross-border capital since late May, cracking down on illegal cross-border securities trading and capital outflows, and for the first time including individuals in the regulation framework of overseas investment. The bank indicated that the market may have overreacted to the potential impact of the new measures on the business of AIA (01299) mainland clients (MCV), and generally does not expect a complete ban, but some degree of tightening is possible. It maintains a "buy" rating with a target price lowered from the original HK$109 to HK$100. The report indicates that due to the high base in mainland China and Hong Kong, the bank expects a slowdown in the year-on-year growth rate of new business value (VONB) in the second quarter to 13%, and forecasts a 15% year-on-year growth rate for the first half of the year. The bank has lowered its VONB forecasts for AIA for the years 2026 to 2028 by 3.5%, 1.8%, and 3.6% respectively, reflecting downward revisions in market forecasts in Hong Kong, and has also reduced this year's forecast for after-tax operating profit by 2.4% to reflect the downward revision in net investment return forecasts. The current low valuations may attract some long-term investors, and if AIA can maintain growth momentum in VONB in mainland China and other ASEAN markets and provide more clarity on MCV sales, the upcoming first-half results will be an important catalyst for a revaluation of the valuation.