AIA Earnings: Strong New Business Growth Momentum Continues Into First Two Months of 2024

AIA Group’s 2023 growth in value of new business on an actual exchange-rate basis was in line with our expectation at 30% year on year. The results again reflect AIA’s resilient and strong new business growth across Asia, with mainland China, Hong Kong, the Association of Southeast Asian Nations excluding Vietnam, and India all delivering double-digit value of new business growth in 2023. However, despite the strong growth and management’s firm commitment to steadily increase the dividend, AIA’s share price dropped 4% on the first day following the results announcement. We believe the market is ignoring the recovery of mainland Chinese visitor, or MCV, business and overconcerned about the asset risk and slowing macro conditions in China. We retain our HKD 96 fair value estimate. AIA is trading at a historical trough of 1.2 times 2024 embedded value equity per share, and we think the shares are undervalued.