AIA reported 3Q26 operating results. Group VONB declined 5%/4% YoY (CER/AER) in 3Q26 to US$1.42bn, slightly behind our estimate (-4%/-3%, link), mainly weighed by the strong comparatives in AIA China/HK specifically centering on sales in Jul-Aug 2025. In Sep, as the high-base effects faded, Group VONB returned to a positive growth trajectory by rising 25% YoY with the strong momentum expected to sustain in 4Q26. VONB of ex-Greater China markets grew 18% YoY (CER) in 3Q26, effectively offsetting the declines from HK and Chinese mainland markets reinforcing the strengths of AIA’s geographical diversification strategy. VONB margin marked a positive surprise by up 5.3% pct YoY to 63.5% in 3Q26, recording the highest quarterly print post-pandemic thanks to favourable product mix shifts towards protection (46% of agency VNB) in Chinese mainland market. ANP slid 13% YoY to US$2.24bn in 3Q26 dragged by the slowdown in sales on high bases. We maintain our view that the 3Q VONB weakness could be a one-off, as underlying momentum has remained resilient across markets, boosted by a Sep recovery and a softer base in 4Q25. On the geographic front, AIA TH/SG’s VONB exceeded our estimates, up 9%/22% YoY (vs. CMBI est: -2%/+14%), reflecting AIA’s competitive edge in the ASEAN market amid a successful transition of AIA TH to mitigate the high-base impact from the critical illness repricing practice in 1Q25. We expect Group VONB to rise 10% YoY (AER) in FY26E, implying a robust uplift of 21% YoY (AER) in 4Q26. Maintain BUY, with our price target based on appraisal value at HK$112 (unchanged).
Valuation: The stock is trading at 1.06x FY26E P/EV and 2.2x FY26E P/B, close to its 3yr historical average. We believe the 3Q high-base headwinds have cleared, and expect a 4Q VONB recovery on top of softer bases and intact underlying momentum. Maintain BUY with our TP at HK$112 (unchanged), which implies 1.7x FY26E P/EV.