Pacific Securities: Initiated coverage on AIA (01299) with a "hold" rating. The new business value is steadily increasing.

The Pacific Securities released a research report stating that they are initiating coverage on AIA (01299) for the first time, giving it a "buy" rating. They project the company's operating revenue for the years 2025-2027 to be 33.178, 35.139, and 37.447 billion US dollars, with net profit attributable to shareholders of 6.367, 7.055, and 8.013 billion US dollars, and net assets per share of 4.26, 4.70, and 5.17 US dollars respectively. The corresponding PB valuations based on the closing price on October 20th are 2.18, 1.97, and 1.79 times. The company's leading position in the Asian life insurance market is solidified, with strong growth in markets such as China Hong Kong and Thailand, as well as improving profit margins in mainland China and high growth in markets like ASEAN and India. Key points from Pacific Securities are as follows: Event: AIA releases 2025 interim performance report In the first half of the year, the company achieved an after-tax operating profit of 3.609 billion US dollars, a year-on-year increase of 6%; a net profit attributable to shareholders of 2.534 billion US dollars, a year-on-year increase of 23.5%; a new business value growth of 14% to 2.838 billion US dollars, and a new business value profit margin increase of 3.4 percentage points to 57.7%; basic free cash flow was 3.569 billion US dollars, a year-on-year increase of 4%; embedded value was 70.853 billion US dollars, an increase of 2.6% from the beginning of the year. Steady growth in new business value, supported by multiple regions In the reporting period, the new business value in the China Hong Kong market grew by 24% to 1.063 billion US dollars, with a 15% increase in new agents, a 25% increase in active new agents, a 35% increase in new business value from agents, and agents' channel new business value accounting for over 70%. Influenced by the outstanding performance of BANK OF EAST ASIA, the company's distribution partners saw a 10% increase in new business value. The new business value in mainland China was 743 million US dollars, with a year-on-year growth of 10% if excluding the impact of economic assumption changes, and the profit margin rose to 58.6%; the Thai market grew by 35% to 522 million US dollars, with a profit margin of 115.7%, mainly benefiting from one-time sales before the implementation of new regulations; the Singapore market grew by 16% to 259 million US dollars; and the overall growth in other markets was 14% to 249 million US dollars. Annualized new premiums grew by 8% to 4.942 billion US dollars, and the increase in the new business value profit margin demonstrates significant optimization of regional and product structures. Channel structure optimization, synergy between agents and bancassurance The new business value in the agent channel grew by 17% to 2.22 billion US dollars, with a total of over 1.1 million agents and continued improvement in productivity. The new business value in the bank and partnership channel grew by 8% to 804 million US dollars, with strong performance in Thailand, Malaysia, and China Hong Kong. The company deepened cooperation with regional leading banks such as BANCOLOMBIA, Banco Popular, and Citi Bank, expanding into the high-net-worth and cross-border customer markets, making the channel structure more balanced and enhancing value contribution. Stable profitability and capital strength, ample cash flow The embedded value operating profit in the first half of the year was 5.893 billion US dollars, a year-on-year increase of 9%, with an annualized embedded value operating return of 17.8%. The after-tax operating profit was 3.609 billion US dollars, a year-on-year increase of 6%, with a shareholder distribution rights operating return of 16.2%. Basic free cash flow was 3.569 billion US dollars, a year-on-year increase of 4%; net free cash flow was 2.430 billion US dollars, a year-on-year increase of 13%. The company announced a mid-year dividend of 49 Hong Kong cents per share, an increase of 10% year-on-year, and returned 3.71 billion US dollars to shareholders through dividends and share repurchases. As of the end of June, the shareholder capital ratio was 219%, maintaining a strong level. Risk Warning: Significant fluctuations in the capital market, reforms progressing slower than expected, and substantial exchange rate fluctuations.