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UBS Expects AIA 1Q VoNB Growth to Maintain at Over 24%

 AIA (01299.HK)  -0.600 (-1.313%)    Short selling $148.81M; Ratio 23.371%   is scheduled to release its first quarter results next Friday (22 April). UBS expected growth momentum in Hong Kong and China to likely remain a key growth driver for the company. The market in Hong Kong and China had reached 49% of total VoNB and 43% of total ANP. Based on the information of CIRC, AIA's China's premiums recorded a growth of 31.7% in 1Q, compared with 20.9% growth of same period last year. The research house expects the Hong Kong market to sustain relatively strong growth, driven by high-quality protection and long-term savings products.

UBS sees limited impact from China's tightening purchases of overseas insurance products using UnionPay cards on AIA (Hong Kong). It is reiterated that the growth for AIA (Hong Kong) is demand-driven (mainly high margin medical insurance products) and will not be materially affected by the slowdown in China capital flow. 

The broker said that since end 2015, AIA's major Asian markets have appreciated against USD by an average of roughly 3% and the equity markets have seen a recovery as well. Hence, it is believed that 2016-2018 VoNB growth can reach 24.3%/ 20%/ 17.2% respectively. In the first quarter, VoNB growth is expected to exceed the full year forecast of 24% growth in 2016. The rating was maintained at Buy, with a target price of $58.27. 

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