Morgan Stanley slightly raised FWD's target price to 47 yuan, expecting last year's new business value to increase by 16% year-on-year

Morgan Stanley published a research report indicating that FWD Group (01828.HK) had a healthy growth performance in new business value (VNB) last year. Although the Hong Kong business is normalizing in the second half of the year, it is still expected that the adjusted operating profit and embedded value will continue to expand throughout the year, with an estimated annual growth of 7% in adjusted operating profit at actual exchange rates (AER). Driven by strong VNB growth and relatively small in-force business, the contract service margin balance is expected to continue recording double-digit growth.

The bank estimates that FWD's VNB for the full year 2025 will grow by 16% year-on-year to USD 964 million, primarily driven by strong growth in the Hong Kong business. By region, the Hong Kong market experienced growth or a slowdown in the second half of last year, with an expected annual VNB growth of 50%, while the profit margin is expected to decline moderately due to a shift in the product mix towards more savings-type sales. The decline in VNB in the Thai market is expected to continue to narrow slightly, with an estimated annual decrease of 9%.

The bank continues to expect that FWD can achieve mid-teens VNB and adjusted operating profit growth in the short to medium term, with a target price slightly raised from HKD 46.5 to HKD 47, maintaining a rating of "Overweight."