Goldman Sachs raises AIA's target price to HKD 96 and reiterates "Buy" rating

Goldman Sachs report indicates that AIA (01299.HK) stock price has risen by 62% since last year, currently valued at 1.4 times the projected intrinsic value for the next year, a new high since 2023, but still below the average of 1.7 times from 2013 to 2023.

The bank stated that AIA's valuation has been supported by the stable compound growth of new business value, intrinsic value, and post-tax operating profit. The bank reassessed AIA's key growth indicators, noting that although premium income growth has slowed, intrinsic value growth has recovered and is on an upward trend. From 2011 to 2019, the average annual growth of new business value was 24%, compared to the bank's estimated average growth of about 15% for the company from 2023 to 2028. However, it is expected that the operating return on intrinsic value will reach 15% by 2025, matching the fastest growth momentum from fiscal years 2018 to 2019, and is expected to continue its upward trend. Additionally, the company is repurchasing with free surplus, and the return on equity is significantly higher than historical levels, expected to reach 17% between 2023 and 2028.

The bank believes that AIA's compound growth story remains valid, despite investor concerns about the increasing proportion of savings-type products in the mainland and Hong Kong markets, but believes this is already reflected in the valuation. The current valuation risk-reward is attractive. The bank raised its forecast for AIA's new business value for 2025 to 2027 by 3% to 4%, and increased the net profit forecast for 2025 by 5%, mainly reflecting the stock market performance in the mainland and Thailand. The bank raised its target price for AIA from HKD 85 to HKD 96, equivalent to 1.4 times the projected intrinsic value for 2027, reiterating a "Buy" rating