AIA Group Earnings: Strong VNB Growth and Enlarged Share Buyback Lifts Market Sentiment

AIA Group experienced a strong first-quarter 2024 performance led by robust growth in the value of new business. This, coupled with news of an enlarged share buyback, lifted AIA shares by 6.1%. Despite the share price runup, AIA is trading at a historical low of 1.1 times 2024 embedded value equity per share, and we believe the stock is undervalued. While we lift our VNB forecast, we retain our fair value estimate of HKD 96 per share as our full-year net profit growth and embedded value growth projections are largely unchanged at 34% and 5.5% year on year, after accounting for higher-than-expected medical claim expenses.