UBS: Slightly lowered target price for AIA (01299) to HKD 104, last year's performance roughly in line with expectations.

UBS Securities released a research report stating that the new business value (VNB) of AIA (01299) in 2025 grew by 15% based on fixed exchange rates, and increased by 17% to $5.516 billion based on actual exchange rates, roughly in line with market consensus. Annualized new premium (ANP) for the period increased by 9%, while the profit margin widened by 3.6 percentage points to 58.5%, mainly benefiting from the product mix shift in Thailand and Hong Kong, as well as the repricing of the business in China. According to another report by UBS, the price target for AIA was slightly reduced from HK$106 to HK$104, with a "buy" rating. The report indicates that, by market segment, VNB growth in the Hong Kong business increased by 28% year-on-year, reaching a new high, with independent financial advisors and brokerage channels, bank insurance channels, and agency channels growing by 49%, 41%, and 26% respectively. VNB growth in the China business was 2%, with new expansion areas contributing to a 45% growth in VNB, accounting for over 9% of the VNB from China business. Embedded value grew by 8.4% in the half-year, higher than the market's expected 6% growth in the half-year. Operating profit after tax (OPAT) grew by 7% to 8% year-on-year, slightly higher than market expectations, mainly benefiting from a decrease in effective tax rates and accelerated release of contractual services margin (CSM). The total annual dividend amount was HK$193.08 cents, a 10% increase year-on-year, exceeding market expectations. The group announced a $1.7 billion share buyback plan, slightly better than some investors' expectations, including a $700 million regular buyback generated by 75% of net free cash flow, as well as an additional $1 billion capital buyback to be used after an annual review. The estimated shareholder return rate is 3.9%, including a 2.3% dividend and a 1.6% buyback.