Morgan Stanley looks at AIA Group's profit prospects and raises the target price to 111 yuan

Morgan Stanley published a research report maintaining an optimistic outlook on AIA Group (01299.HK) and raised its target price by 16%, from HKD 96 to HKD 111, maintaining an "Overweight" rating. The report pointed out that AIA's new business value is expected to grow strongly in 2025, with a projected increase of 17% at constant exchange rates, laying a solid foundation for 2026.

The firm anticipates that AIA's new business value for the entire year of 2025 will reach USD 5.58 billion, representing an 18% year-on-year increase at actual exchange rates (AER), primarily driven by strong growth of 28%, 19%, and 19% in the Hong Kong, Thailand, and Singapore markets, respectively. Although growth in the fourth quarter is expected to normalize slightly to 13%, the overall performance remains robust. Meanwhile, the company's operating profit and embedded value are expected to achieve year-on-year growth of 13% and 18% per share, respectively.

Morgan Stanley believes that with the recovery of growth momentum in the Chinese market and healthy growth across various regional businesses, AIA has returned to a sustainable growth trajectory. The firm has raised its forecasts for AIA's new business value growth for 2026 and 2027 to 16% and 15%, respectively, reflecting confidence in its long-term profitability.

Additionally, the report mentioned that AIA plans to repurchase a total of USD 2.3 billion in shares and distribute USD 2.7 billion in dividends in 2025, with an expected annual shareholder return rate of over 4%. Morgan Stanley anticipates that the company may announce a new round of share repurchase plans when it reports its full-year results in March this year, further enhancing shareholder value