AIA Q1 NBV Beats Expectations; Strong Momentum in HK and Mainland China; Goldman Sachs Reiterates Buy

Overview

This report analyzes AIA's (1299.HK) Q1 2026 trading update. The core conclusion is that despite an unexpected decline in Thailand, the company's robust growth in Hong Kong and Mainland China significantly exceeded both Goldman Sachs' estimates and market consensus, resulting in solid overall New Business Value performance and positive momentum. Based on this, Goldman Sachs reiterates its 'Buy' rating on AIA and maintains a target price of HK$97. The report suggests that as one-off factors in Thailand fade, group-level VONB growth momentum will be supported in H2 2026.

Core views

In terms of financial performance, AIA achieved Value of New Business (VONB) of US$1.757 billion in Q1 2026. This represents 13% YoY growth on a constant exchange rate basis and 17% on an actual exchange rate basis. This figure not only exceeds Goldman Sachs' prior estimate of 16% by 1 percentage point but also significantly surpasses the compiled consensus growth range of 9%-13%. Breaking down by region, the Hong Kong market performed particularly well, with VONB growing 21% YoY. This strong growth was driven by continued expansion in domestic and intermediary channels (MCV), with robust demand for both savings and protection products. Notably, broker channel VONB continued to improve sequentially from Q4, suggesting sustained YoY growth momentum. Mainland China also delivered excellent results, with VONB up 26% YoY, benefiting from strong demand for savings products and a 17% YoY increase in protection product sales. Additionally, new agent recruitment grew by over 20% YoY, with productivity improvements seen across both new and existing agents. However, Thailand emerged as a major drag. Q1 VONB fell 18% YoY, a steeper decline than Goldman Sachs' expected 12%. The primary reason was a high base of health insurance sales in Q1, largely driven by front-loading ahead of subsequent co-payment regulations. While Annualized New Premiums (ANP) grew 7% YoY, mainly driven by unit-linked products, margins dropped below 100% (compared to 115% in H1 2025). Nevertheless, given the absence of special items affecting the Thai market post-Q1, Goldman Sachs expects growth to recover, offsetting high base effects in places like Hong Kong and supporting strong full-year growth momentum at the group level. Among other markets, Malaysia, Singapore, and Other Markets all reported single-digit VONB growth. Singapore's growth was driven by bancassurance and broker channels, while Malaysia benefited from a recovery in agency sales. Growth in Other Markets was primarily supported by Vietnam, the Philippines, and India, partially offset by declines in Australia and Indonesia.

Analysis framework

Goldman Sachs employed a typical 'Sum-of-the-Parts' approach combined with 'Expectation Gap Analysis' to evaluate AIA's results. First, analysts broke down group VONB into key geographic markets (Hong Kong, Mainland China, Thailand, etc.), identifying core growth drivers (HK/Mainland) and drags (Thailand) by comparing actual segment performance against estimates. Second, the report focused on distinguishing between 'one-off factors' and 'structural trends,' noting for instance that Thailand's decline stemmed from a high base effect prior to policy changes rather than long-term deterioration, thereby assessing the likelihood of recovery in subsequent quarters. Finally, by comparing internal model forecasts with market consensus, the report confirmed the stock's relative attractiveness at current levels, justifying the maintained Buy rating.

Methodology notes

• Valuation MethodologyP/EV insurance valuation

  Using Price-to-Embedded Value (P/EV) as the core valuation metric for insurance stocks

  The research note uses a 1.4x 2027E P/EV multiple to derive the target price. For insurance companies, since book value does not truly reflect future profitability, using Embedded Value (EV) as the denominator provides a more accurate measure of intrinsic value and growth premium compared to traditional P/E ratios.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposing changes in Value of New Business (VONB) into the combined effects of new business premium volume (volume) and new business margin (price)

  When analyzing the Thai market, the report notes that although premium volume (ANP) grew 7%, margins dropped significantly below 100%, causing VONB to decline. This 'volume up, price down' analysis helps readers understand why premium growth failed to translate into profit growth.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AIA (1299.HK)

  Direct beneficiary. Core coverage of the report; earnings beat expectations and Buy rating maintained.

  Strengths

  Strong momentum in Hong Kong and Mainland China markets with significant VONB growth; expanding agent force with rising productivity; competitive brand advantage in high-end medical insurance segments.

  Weaknesses

  Thai market faces short-term downside risks from margin compression and base effects; sensitive to declines in other emerging markets (e.g., Australia, Indonesia).

  Comparison

  Compared to peers, AIA has stronger penetration and brand equity in HK/Macau and core Southeast Asian markets. However, exposure to policy risks in single markets (e.g., Thailand) means its diversified layout offers both diversification benefits and increased management complexity.

  Risks

  Slowing economic growth in Mainland China, particularly hindering sales of high-margin protection products; delays in regulatory approvals for new provinces in Mainland China; tighter capital controls in Mainland China affecting HK policy renewals; broad economic weakness across Asia.

Key data

• 2026 Q1 Value of New Business (VONB)US$1.757 billionUp 17% YoY on an actual exchange rate basis, beating expectations by 1 ppt
• Hong Kong VONB Growth+21%YoY growth driven by strong demand for savings and protection products
• Mainland China VONB Growth+26%YoY growth with increases in both agent recruitment and productivity
• Thailand VONB Growth-18%YoY decline, worse than expected -12%, impacted by a high base
• Target PriceHK$97.00Based on 1.4x 2027E P/EV multiple
• Current Share PriceHK$84.95Closing price as of April 29, 2026

Impact & implications

For AIA, the strong performance in Hong Kong and Mainland China lays a solid foundation for full-year 2026 results, alleviating investor concerns about slowing growth. While short-term volatility in Thailand introduces uncertainty, its one-off nature implies sequential improvement in H2 is achievable. For investors, these earnings validate AIA's pricing power and channel advantages in core Asian markets; current valuations (implying 14.2% upside) reflect its solid fundamentals. Provided the macro environment does not deteriorate sharply, the group is poised to maintain double-digit VONB growth.

Risks

• Slowing economic growth in Mainland China, particularly hindering sales of high-margin protection products
• Delays in regulatory approvals for new provinces in Mainland China
• Significant tightening of capital controls in Mainland China negatively impacting HK policy sales and renewals
• Broad economic weakness across Asia

What to watch

• Whether Thailand's VONB recovers in Q2 and H2 as expected
• Sustained demand intensity for savings and protection products in HK and Mainland China
• Productivity improvements and retention rates within the agent force
• Impact of macroeconomic data across Asian countries on insurance consumption sentiment