Goldman Sachs: AIA (01299) exceeded expectations in the ASEAN market performance in the second quarter, with market attention focused on the latest sales momentum update.

Goldman Sachs issued a research report stating that AIA (01299) released its interim results this morning. The report indicates that the value of new business in Hong Kong (VONB) in the first half was below expectations, which means that the growth rate for the second quarter will only be in the single digits, a significant slowdown compared to the first quarter (21% growth). AIA's performance in the first half was slightly below expectations, mainly due to weak contributions from the Hong Kong market in the second quarter, while the performance in the ASEAN markets (Thailand, Singapore, and Malaysia) exceeded expectations. However, Goldman Sachs pointed out that this was mainly due to a high base from the business generated by mainland travelers, while the performance from the mainland China operations was outstanding. For the mainland traveler business, the firm was pleased to see that the new business value in the second quarter grew compared to the previous quarter, with June showing the most significant increase. The firm believes that the market's focus will remain on management's update on the latest sales momentum. In addition to the new business value, AIA's operating profit after tax (OPAT) for the first half increased by 15% year-on-year, exceeding market expectations by 5%. This was primarily attributed to an increase in the release of contractual service margin (CSM) and a decrease in the effective tax rate. For the first half of 2026, based on the actual exchange rate (AER)/constant exchange rate (CER), the year-on-year growth in OPAT per share was 18%/13%, far exceeding the growth target of 9-11% for 2023-2026. After deducting dividends and share buybacks, the company's core embedded value (EV) has grown by 5% year-to-date, indicating that the basic operating return (annualized) for the first half of 2026 is 18%. The dividend per share (DPS) increased by 10% year-on-year to HKD 0.539. AIA will hold a performance briefing this morning. In addition to the latest sales momentum in Hong Kong, Goldman Sachs will also focus on the following three aspects: 1) How the growth prospects in mainland China will be impacted, given the hit on bank insurance sales in the first half of 2026; 2) The latest situation in the ASEAN markets; and 3) Any updates on capital regulatory plans.