【行业研究报告】友邦保险-FY23 VNB +33% in line; strong MCV momentum sustained to 1-2M24

AIAChinaVNB+28%YoYinFeb-Decimplyingresilience.AIAChinagrew
full-yearVNBby20%YoY,ofwhichagencyVNBwas+20%YoYinFeb-Dec
full-yearVNBby20%YoY,ofwhichagencyVNBwas+20%YoYinFeb-Dec
aspandemicdisruptionssubsided.AgencyVNBmarginroseto63.4%in2H23,
+6.7pctfrom56.7%in1H23givenproductmixshiftingtotraditionalprotection
andlucrativelong-termsavings,suchasprivatepensionandretirementplans
withVNBmargin>65%.Criticalillness(CI)madeup~70%ofprotectionVNB
in2H23.Thebancassuranceadvancedrapidly,makingup6%oftotalVNBwith
aconsecutivelyincreasingmarginto>30%byJan2024.Theinsurercarried
onwithprovincialexpansions,to1-2citiesperyear.Lookingahead,weexpect
thelong-termsavingsmomentumtosustainwithinaprolongedlow-interest-
rateenvironment;yetfrom2Q24onwards,ahighbasemightbeapressure.
CSM+6%YoYoutgrewOPATbolsteringfinancialhealth.TheIFRSOPAT
(-1%YoYonCERbasis)wasbelowmarketexpectations,asafirstdeclinein
company’shistory.Weseethisfallaresultof:1)US$221mmedicalclaimsthat
negativelyoffsettheCSMcontribution(+6%YoY)toinsuranceserviceresults
(-5%YoY);and2)alowCSMbeg.balancedraggedbyprior-yearVNBdecline.
Yet,weareunconcernedasof:1)theCSM,whichimpliestheunearnedprofit
ofin-forcepoliciesforfuture,outgrewOPATgrowthby+6%YoY,showingthe
Group’sfinancialhealthwithincrementalfutureprofitrelease;2)EVoperating
profit+30%YoYtoUS$8.9bnsupportingconsistentEVgrowth;3)theinsurer
refinedEVassumptionsbyloweringtheriskdiscountrate(RDR)ofAIAChina,
AIAThailandandAIAMalaysia,andincreasingthelong-termequityinvestment
returnofmostmarkets.Aftertherefinement,theavg.RDRis-45bpsto9.5%
andavg.long-termequityreturnis+8.5bpsto8.9%givingupsideforfutureEV.
RevisepricetargettoHK$96.5.Wereviseourvaluationwithanewprice
targetderivedfromP/EVvsRoEVandAppraisalValueapproach.Weadjust
assumptionsof1)long-termRoEVfrom14%to11%;2)riskdiscountratefrom
10%to9.5%;and3)adding8.6%investmentreturntocalc.fordiscountfactor.
Thestockisnowtradingat1.2xFY24EP/EV,whileournewpricetargetimplies
1.8xFY24EP/EV.Wearepositiveontheinsurer’sorganicgrowth,disciplined
capitalmanagement,andconsistentreturnstoshareholders.ReiterateBUY.