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JPM: Market Over-discounting MCV Risk for AIA (01299.HK); Recommend Buying on Dips
Recommend 9 Positive 10 Negative 7 |
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JPMorgan published a research report stating that AIA (01299.HK)'s share price saw a notable pullback yesterday (4th) due to market concerns that some Hong Kong banks have suspended account openings for mainland customers. However, the broker believes the market has over-discounted concerns over the growth outlook of mainland Chinese visitor (MCV) business in Hong Kong, and there are currently no specific new regulatory policies targeting MCV sales activities. Although Hong Kong's MCV business remains relevant, valuation analysis shows that Hong Kong customers account for only a small portion of AIA's future growth value.
The broker expects AIA's upcoming strong 1H26 results, official comments in August on MCV regulation, a recovery in Thailand's monthly premiums, and upward revisions to mainland insurers' 1H26 new business value (NBV) forecasts to help restore market confidence. Therefore, it recommends investors Accumulate on dips.
JPMorgan noted that the market appears to be pricing in more severe risks, such as restrictions on mainland customers opening bank accounts in Hong Kong. However, risks related to the Hong Kong business have a limited impact on its TP. In its sum-of-the-parts valuation, future growth expectations in mainland China account for HKD18 of the TP, ASEAN and other markets (including India) account for HKD19, while Hong Kong accounts for only HKD14. Even if half of the embedded future growth expectations in Hong Kong were removed, the TP adjustment would be only 6%.
The broker believes that if the share price falls further to below 1.0x projected embedded value (P/EV), equivalent to HKD72.5, investors would reassess the stock. It forecasts that AIA's NBV will grow YoY by 13%, 19% and 17% for fiscal years 2026 to 2028, respectively.
JPMorgan maintained its Overweight rating on AIA (01299.HK) with a TP of HKD112. (ad/da) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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