Morgan Stanley lowered its target price for AIA Group (01299) to HK$92 from HK$97 and maintained its "overweight" rating.
AIA is scheduled to release its 3Q operating update on 15 November. The research house estimated that quarterly VNB (Value of new businesses) growth could slow to 4% on a constant exchange rate (CER) basis (FX impact was immaterial). Though below AIA's normal growth rate of >15%, this has likely been well expected given the 15% share correction since mid-July.
Morgan expects Hong Kong VNB to be 10% lower in 3Q. The Hong Kong Insurance Authority mentioned a double-digit decline in Mainland Chinese Visitor (MCV) business. Given AIA's high exposure (>60% of 1H APE from MCV), this could lead HK's overall VNB to decrease, although the local segment was still growing.
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