Jefferies has issued a research report initiating coverage on FWD (01828), assigning a Buy rating and setting a target price of HK$37.4. The report highlights that the company combines exposure to double-digit growth in Asian life insurance with a trend of continuously improving profitability, yet it currently trades at only around 0.7x price-to-embedded value (P/EV).

The analysis suggests that investors are overly focused on the recent slowdown in sales growth while underestimating the significant improvement in the company's earnings quality.

Regarding the first-quarter figures, the report notes that Annual Premium Equivalent (APE) growth slowed to 4% and Value of New Business (VNB) growth slowed to 7%. This primarily reflects a high base effect from exceptionally strong prior-year performance in the Hong Kong market, rather than a weakening of underlying demand. Growth in markets such as Japan and emerging markets remains robust, supporting the firm's expectation for a recovery in this growth to approximately 10-13% (low-teens) starting from 2027.

Furthermore, the report points out that investor sentiment has weakened due to renewed concerns over cross-border capital flows and worries about a potential impact on sales to Mainland Chinese Visitors (MCV). However, MCV sales contribute only about 13% to the group's total APE and VNB, implying a limited effect on overall profitability.