Goldman Sachs: AIA (01299) second quarter new business value growth is expected to slow to 12%, maintaining a "Buy" rating.

Goldman Sachs released a research report stating that it expects AIA (01299) to achieve a year-on-year growth of 15% in new business value during the first half of this year, reaching USD 3.254 billion based on actual exchange rates. The growth rate for the second quarter is expected to slow to 12% (in terms of actual exchange rates), down from 17% in the first quarter, primarily due to the high base effect in the Hong Kong market rather than a slowdown in sales. The bank forecasts that the annualized new premiums and new business value in Hong Kong will both record quarter-on-quarter growth in the second quarter. Goldman Sachs raised its net profit forecast for the fiscal year 2026 by 12%, mainly reflecting strong stock market performance in the first half, leading to a 2% increase in book value forecasts for 2026 to 2028. Based on a projected embedded value of 1.4 times, the target price remains unchanged at HKD 97, reaffirming a "buy" rating. AIA will announce its second-quarter and first-half results before the market opens on August 20. Goldman Sachs anticipates that investors will focus on the growth momentum of sales in Hong Kong and the growth in the mainland Chinese market, including the number of agents, bancassurance sales, product mix, and margins on new business value; regarding capital management, attention will be paid to share buybacks and potential non-organic growth opportunities. In terms of regional performance, Goldman Sachs expects mainland China to be the fastest-growing market, with a year-on-year increase of 13% in new business value based on fixed exchange rates in the second quarter; Thailand is expected to recover with a year-on-year growth of 5% in the second quarter due to the beneficial sales of unit-linked insurance products, reversing an 18% decline in the first quarter; growth momentum in Singapore, Malaysia, and other markets is anticipated to remain stable. The bank expects AIA's after-tax operating profit for the first half of the year to rise by 10% year-on-year to USD 3.957 billion, driven by strong performance in the insurance services sector; net free surplus generation (NFSG) is projected to increase by 12% year-on-year to USD 2.72 billion; the embedded value (EV) is expected to rise by 5% semi-annually to USD 80.4 billion, in line with market expectations, benefiting from positive impacts from foreign exchange and investment fluctuations, with an annualized operating ROEV of 16%. Mid-term dividend forecasts are expected to increase by 10% year-on-year to USD 0.069 per share.