Goldman Sachs reiterates Buy rating on AIA Group, with a HK$97 target price

Overview

This report is Goldman Sachs' preview of AIA's 1H26 results. The company will release its 2Q/1H26 results before market open on August 20. Goldman Sachs expects 2Q26 new business value growth to moderate, mainly because of the high 2Q25 base in Hong Kong; however, Hong Kong APE and VONB are expected to increase sequentially from 1Q26, Mainland China is expected to remain the fastest-growing market, and Thailand is expected to turn from a decline in 1Q to positive growth.

Core views

The core views are: first, the slowdown in 2Q26 VONB growth is driven more by base effects than by deteriorating sales momentum; second, following the Hong Kong regulatory announcement, investors will focus on Hong Kong sales momentum and trends in 3Q and subsequent quarters; third, Mainland China growth, agent headcount, bancassurance sales, product mix, and VONB margin remain key areas to monitor; fourth, EV, OPAT, NFSG, and DPS all indicate that the company's compound growth and capital return capabilities remain solid.

Analysis framework

The report combines earnings preview analysis, a regional breakdown of VONB growth, an EV and P/EV valuation framework, and analysis of capital generation and shareholder returns, while fine-tuning earnings and book value forecasts based on year-to-date sales performance and market trends.

Methodology notes

• Valuation methodsP/EV

  Forward embedded value multiple valuation

  The HK$97 target price is based on 1.4x FY27E P/EV. The target multiple is derived from assumptions for ROEV, long-term growth, and cost of equity, with a 2% long-term growth assumption.

• Operating metricsVONB

  Value of new business

  The report uses VONB to measure new business quality and growth momentum, with analysis broken down across Hong Kong, Mainland China, Thailand, Singapore, Malaysia, and other markets.

• Capital and returnsEV/ROEV/NFSG/DPS

  Embedded value, return on embedded value, net free surplus generation, and dividend per share

  The report emphasizes that AIA's compound growth is driven by solid EV growth, strong operating profit, capital generation, and sustained shareholder returns.

Asset mapping & comparison

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

• AIA Group / 1299.HK

  Covered company and leading Hong Kong-listed insurance company

  Strengths

  Regional diversification, significant contributions from Hong Kong and Mainland China, solid OPAT and NFSG growth, and strong capital return capabilities.

  Weaknesses

  Near-term VONB growth is affected by the high base in Hong Kong and is sensitive to sales momentum in Mainland China and Hong Kong.

  Comparison

  Among the insurance and financial-related companies covered by Goldman Sachs, AIA is rated Buy; it currently trades at approximately 1.2x forward P/EV, versus a target multiple of 1.4x FY27E P/EV.

  Risks

  Slower Mainland China growth, delays in regulatory approvals, tighter Mainland capital controls affecting Hong Kong sales and policy renewals, and weaker Asian macroeconomic growth.

Key data

• 1H26 VONB forecastUS$3,254mnYear-on-year growth of 11%/15% on a CER/AER basis, respectively.
• 2Q26 VONB growth forecast10%/12%On a CER/AER basis, respectively, below 1Q26's 13%/17%.
• Hong Kong 2Q26 VONB growth forecast12% yoyBelow 1Q26's 21%, mainly due to the high 2Q25 base.
• Mainland China 2Q26 VONB growth forecast13% yoyExpected to remain the fastest-growing market, on a CER basis.
• Thailand 2Q26 VONB growth forecast5% yoyA significant recovery from the 18% year-on-year decline in 1Q26, driven by unit-linked product sales.
• 1H26 OPAT forecastUS$3,957mnUp 10% year-on-year, driven by strong insurance service results.
• 1H26 NFSG forecastUS$2,720mnUp 12% year-on-year, driven by growth in distributable earnings from in-force business.
• 1H26 EV forecastUS$80.4bnExpected to grow 5%, supported by favorable foreign exchange effects and investment variances.
• 1H26 annualized operating ROEV16%Reflecting embedded value return capabilities.
• Medium-term DPS forecastUS$0.069/shareUp 10% year-on-year.
• Target priceHK$97.0012-month target price, based on 1.4x FY27E P/EV.
• Current price and upsideHK$79.25; 22.4%From the report's price target table.

Impact & implications

For investors, the near-term focus is on sales momentum following the Hong Kong regulatory environment, sustainability into 3Q, and the quality of the Mainland China business; the medium-term investment thesis depends on AIA sustaining double-digit VONB/OPAT/NFSG growth, stable ROEV, and continued enhancement of shareholder returns. The unchanged target price alongside higher earnings forecasts indicates that Goldman Sachs believes improved market performance and capital generation can offset the impact of the 2Q base effect.

Risks

• Slower Mainland China growth, particularly a slowdown in sales of high-margin protection products.
• Delays in regulatory approvals for new provinces in Mainland China.
• Significantly tighter capital controls in Mainland China, which could negatively affect Hong Kong sales and policy renewals.
• Weak economic growth across Asia.
• If sales momentum in 3Q and subsequent quarters is weaker than expected following the Hong Kong regulatory announcement, valuation could come under pressure.

What to watch

• The 2Q/1H26 results announcement before market open on August 20.
• Whether Hong Kong APE and VONB deliver sequential growth from 1Q26.
• Hong Kong sales momentum in 3Q and subsequent quarters.
• Mainland China agent headcount, bancassurance sales, product mix, and VONB margin.
• Whether the recovery in Thailand's unit-linked product sales continues.
• Capital management actions, including buybacks, dividends, and potential inorganic growth opportunities.