UBS released a research report estimating that AIA's (01299) new business value (NBV) for 2025 will grow by 17% and 19% on a constant exchange rate (CER) and actual exchange rate (AER) basis, respectively (market consensus is 18% growth on an AER basis). This implies fourth-quarter year-on-year growth of 14% and 16%. The bank raised its target price from HK$88 to HK$106, reaffirming its "Buy" rating.
On a CER basis, the bank expects VNB growth in Hong Kong to have moderated in the fourth quarter (compared to 40% growth in Q3), yet the growth momentum remains solid, driven by strong demand for the Global Flexi savings plan and sales momentum from September spilling over into October following regulatory changes. Although a pullback in VNB from the brokerage channel is anticipated, the agency and bancassurance channels delivered robust growth performances in Q4.
In Mainland China, UBS expects AIA's full-year VNB growth to moderate slightly compared to the 5% growth seen in the first nine months, similar to its peers, but the moderation is expected to be mild, primarily because the fourth quarter typically contributes only about 9% of the full-year 2024 VNB. In Thailand, a more pronounced slowdown is anticipated for Q4, as demand was largely front-loaded into the first nine months of the year. Data shows annualized new premiums fell 2.9% in October-November (compared to 8.5% growth in the first nine months).
In Singapore, the strong VNB growth momentum witnessed in the third quarter is expected to have continued into the fourth quarter. In Malaysia, UBS believes VNB growth accelerated in Q4, supported by a narrowing decline in VNB from the agency channel. In other markets, VNB is projected to return to positive growth in Q4 (after being flat in Q3), primarily driven by the Indian market.
UBS raised its 2025 earnings per share forecast by 11%, reflecting the strong performance of equity markets in the second half of the year, mainly due to an increase in the present value of future new business value. The bank also increased its embedded value forecast by 2% to account for the rising equity market trend and a weaker US dollar, and rolled its valuation base forward to 2026.