UBS: Initiating coverage on FWD (01828) with a "Neutral" rating and a target price of HKD 32.

UBS released a research report stating that it has initiated coverage on FWD (01828) with a "Neutral" rating and a target price of HKD 32. Founded in 2013, FWD is a life insurance company focused on the Asian market, operating in 10 markets, with core markets being Hong Kong, Thailand, and Japan. The report highlights the strong structural attractiveness of the Asian insurance market, driven by an expanding protection gap, the potential for deposit migration fueled by wealth creation, and policy support. FWD benefits from advantages such as low base growth potential, technological flexibility, and exclusive partnerships with major banks, forecasting a compound annual growth rate (CAGR) of 12% for new business value and 16% for post-tax operating profit from 2025 to 2030. However, the group is highly dependent on third-party channels (such as brokers), which are expected to contribute 78% of new business value in 2025. These channels face high regulatory risks, intense commission competition, and significant management complexity. Establishing a high-quality agency team takes time and faces challenges such as a slowing labor trend, poaching restrictions, and competition from emerging professions. UBS points out that FWD's embedded value in 2025 is only equivalent to 8.9% of AIA (01299). As a young and smaller company, FWD has the opportunity to learn from the successes of market leaders while being more flexible in execution and more selective in choosing business opportunities. However, the bank expects FWDs CAGR for new business value from 2025 to 2030 to be below AIA's 15%, primarily due to: 1) AIA's geographical expansion opportunities in China; and 2) FWD's predominantly broker-based business model, which faces higher regulatory risks.