Morgan Stanley lowered its target price for Prudential plc (02378) to 1,750p from 2,100p (or HK$177.8 from HK$213.35) and maintained its "overweight" rating.
The research house said its analysis suggests that the current share price materially undervalues the core Asia franchise which, despite recent headwinds, remains very well positioned to grow sustainably into the medium term.
Morgan thinks the current price implies little more value than Jackson at zero and Asia at ~1.1x FY2020 embedded value. Applying these assumptions to its model returns an FY2020 valuation of 1,317p - around 95% of the current market cap (1,383p per share).
Hong Kong is likely to dominate sentiment for Asia in the near term. Morgan noted that HK comprised 47% of 1H present value of new business premiums for the Asia unit and 64% of new business profits. However, there are positives with, for example, Indonesia showing signs of recovery (up 19% year on year in AER) and China growing strongly (+56%).
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