Changjiang Business Daily news ●Changjiang Business Daily reporter Xu Jia
Thanks to the greater contribution from mainland China business, AIA (1299.HK) new business value growth in the first quarter exceeded market expectations.
According to AIA disclosed that in the first quarter of this year, its new business value increased by 19% to US$1.052 billion (at fixed exchange rates, the same below), annualized new premiums increased by 10% to US$1.703 billion, and new business value profit margin It increased by 4.5 percentage points to 61.6%, and total weighted premium income increased by 6% to US$9.663 billion.
AIA previously disclosed in its annual report that in the first two months of 2021, the new business value of AIA's China business compared with the same period in 2020, the annualized growth rate reached 15%, a strong performance.
Based on this, many institutions have recently raised their target prices for AIA . Among them, Daiwa raised the target price from HK$128 to HK$132, while Goldman Sachs and Credit Suisse gave target prices of HK$116 and HK$120 respectively.
As of the close of trading on May 17, AIA Hong Kong stock price was 102.9 Hong Kong dollars per share, which has increased by more than 75% from the low of 58.767 Hong Kong dollars in March last year.
The value of new business in the first quarter reached US$1.052 billion
A few days ago, AIA disclosed a summary of new business in the first quarter of 2021 on the Hong Kong Stock Exchange. In the first quarter of this year, AIA 's new business value increased by 19% to US$1.052 billion, annualized new premiums increased by 10% to US$1.703 billion, new business value profit margin increased by 4.5 percentage points to 61.6%, and total weighted premium income Increased 6% to US$9.663 billion.
In response, AIA Group CEO and President Li Yuanxiang said that AIA ’s new business in each market segment (except Hong Kong, China) has exceeded the level before the epidemic.
As currently the largest independent listed life insurance group in the Pan-Asian region, AIA 's business has covered 18 markets around the world.
Previously, AIA had disclosed that AIA achieved total revenue of US$50.359 billion in 2020, an increase of 6.6% from US$47.242 billion in 2019. Among them, premium and fee income was US$35.78 billion, a year-on-year increase of 2.88%, and net premium and fee income was US$33.328 billion, a year-on-year increase of 2.2%.
In 2020, AIA’s pre-tax profit was US$7.27 billion, a year-on-year increase of 0.6% (adjusted); the net profit attributable to the company’s shareholders was US$5.779 billion, a year-on-year decrease of 3.34%.
Affected by the epidemic, AIA new business value in 2020 was US$2.765 billion, a decrease of 33% from US$454 million in the previous year. It was the first time that the company's new business value dropped since it went public in 2010. During the reporting period, AIA's new business value rate was 52.6%, a year-on-year decrease of 10.4 percentage points, and the annualized new premiums were US$5.219 billion, a year-on-year decrease of 20%.
Mainland China business contributes the most to new business value
The rapid recovery of new business value this year is mainly due to the greater contribution of AIA’s mainland China business.
In its previous annual report, AIA disclosed that AIA's China business will bring the largest contribution to the company's new business value in 2020, and it is also the first reporting segment of AIA to show that sales momentum has recovered. The
annual report shows that due to the impact of the epidemic, the new business value of the AIA Mainland China branch last year was US$968 million, the new business value rate was 80.9%, and the annualized new premiums were US$1.197 billion. Although this was a decrease to varying degrees compared with 2019, However, it surpassed the Hong Kong division of China for the first time and became the division with the highest new business value, new business value rate and annualized new premium of AIA.
At that time, AIA also disclosed that in the first two months of 2021, the new business value of AIA's China business compared with the same period in 2020, the annualized growth rate reached 15%, a strong performance.
It is worth mentioning that in November last year, AIA announced that AIA Life had obtained approval from the China Banking and Insurance Regulatory Commission to start preparations for the establishment of a Sichuan branch. In late March this year, AIA Life received approval from the Sichuan Supervision Bureau of the China Banking and Insurance Regulatory Commission to establish and open a Sichuan branch.
Last month, AIA Life’s Sichuan branch officially opened, becoming the first provincial branch established after AIA Life’s “sub-reform”. This also means that AIA Life has begun its business layout of “expanding territory” across the country. A new journey.
In addition to the mainland China market, AIA’s new business value growth in Southeast Asia remains strong. Among them, AIA Thailand business became the second largest source of new business value for the group in the first quarter of this year. Singapore recorded positive new business value growth and agency distribution business recorded double-digit growth. AIA's Malaysia business continued its strong momentum in the second half of 2020, recording the highest new business value growth among the company's reportable market segments.
As new business value growth in the first quarter exceeded expectations, many institutions gave AIA a higher target price. For example, CITIC Construction Investment, Guotai Junan, and Industrial Securities gave target prices of HK$112, HK$117.21, and HK$113.1 respectively. Goldman Sachs maintains its target price of HK$116 and its buy rating. Credit Suisse maintains AIA's "outperform" rating with a target price of HK$120. Daiwa raised its target price from HK$128 to HK$132, reiterated AIA as the industry's preferred stock, and maintained a "buy" rating.
As of the close of trading on May 17, AIA was quoted at 102.9 Hong Kong dollars per share. Although it was down from the highest price of 109.3 Hong Kong dollars per share at the beginning of the year, it was up more than 75% from the lowest point of 58.767 Hong Kong dollars in March last year.
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