Daiwa Capital Markets has issued a research report maintaining a "Buy" rating on AIA (01299) and raising its 2026–2027 operating profit after tax (OPAT) forecasts by 3.2% and 3.9%, respectively, with a target price of HK$109.

The report indicates that AIA's new business value (VONB) for 2025 increased by 17% year-on-year to US$5.5 billion, slightly below the firm's expectations. This was mainly due to weaker-than-expected sales growth in mainland China and Thailand, partially offset by a 4 percentage point expansion in VONB margin to 58.5%. The margin improvement was driven by strategic shifts in product mix in Thailand and Hong Kong, as well as repricing benefits in mainland China.

The report noted that AIA's shareholder returns slightly exceeded expectations, with the announcement of a US$1.7 billion share buyback program, slightly higher than the expected US$1.6 billion. Combined with full-year dividends, the total shareholder return for 2025 reached 4.1%. During the period, embedded value grew by 10% year-on-year to US$76.8 billion, while operating return on embedded value (ROEV) rose by 90 basis points to 15.8%, supported by favorable investment and operational variances, VONB growth, and foreign exchange gains.

Additionally, the company's operating profit (OPAT) accelerated, increasing by 8% to US$7.1 billion, primarily driven by higher release of the contract service margin (CSM) and positive operational variances. Management revealed that VONB growth in mainland China exceeded 20% in the first two months of this year, and momentum in Hong Kong continued into the first quarter. To address market concerns over private credit risks, the group disclosed that its exposure as of the end of last year stood at US$3.3 billion, accounting for approximately 2% of non-participating and surplus assets, with no investments in high-risk AI, software, or technology-specific funds.