China / Hong Kong Company Guide

AIA Group
Version 1 | Bloomberg: 1299 HK Equity| Reuters: 1299.HK
Refer to important disclosures at the end of this report

DBS Group Research . Equity 7 Jan 2020

BUY (Reinstating coverage) The long-term champion

Last Traded Price( 6 Jan 2020):HK$84.30(HSI : 28,226)
Major beneficiary of China’s market liberalisation. Reinstate
Price Target 12-mth:HK$102 (21.0% upside)
coverage with BUY call. AIA is seen as the major beneficiary of
Analyst China’s market liberalisation, as the government’s granting of full
Ken SHIH +852 36684184, kenshih@dbs.com ownership to foreign insurers implies that AIA China can expand
Sam Lu +852 36681253; samlu@dbs.com beyond its five geographical areas from FY21F onwards. This
would enable AIA to enjoy stronger market penetration growth in
What’s New China. The recent appointment of Ping An’s (2318 HK) former
Executive Director, Lee Yuan Siong, as AIA Group’s new CEO,
• China’s market liberalisation to secure a 32% indicates that the insurer will be more aggressive in China from
CAGR for VONB from the market in the next six hereon. Prolonged business impact from HK unrest is expected,
years but the effect will gradually dissipate from 2H20F onwards due to
• VONB contribution from China market to outpace lower-base effect. With China’s strong secular growth and AIA’s
solid franchise among the high-affluence segment, China will
that from HK by FY21F
outpace HK to become the main VONB contributor by FY21F.
• Prolonged impact expected from HK unrest but
effect to dissipate from 2H20F onwards on lower- Where we differ: Our analysis suggests that China’s market
base effect liberalisation will help secure a 32% CAGR for value of new
business (VONB) from China in the next six years, which would
• Reinstate coverage with BUY rating and TP of HK bring an additional HK$3.7/share to AIA’s fair value due to strong
$102 for 21% potential share price upside organic growth.

Potential catalysts: AIA’s share price has a positive correlation of

Price Relative 0.94 with VONB it generates, which is considered significantly
HK$ Relative Index
221
high. Stronger VONB growth likely from the China market may
93.5
201
serve as the next catalyst. Any stabilization in the HK situation
83.5
181 may lead to a relief rally.
73.5
161
63.5
141 Valuation:
53.5 121 Our TP is based on a two-stage EV growth model, with a) first
43.5 101
stage to factor in existing organic growth, and b) second stage to
include the present value (PV) of additional VONB from China due
33.5 81
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

AIA Group (LHS) Relative HSI (RHS)

to market liberalisation, and is pegged to a 2.2x FY20 P/EV
multiple.
Forecasts and Valuation
FY Dec (US$ m) 2018A 2019F 2020F 2021F
Key Risks to Our View:
Net earned premiums 29,716 31,280 34,801 39,352
Net investment income 8,076 8,861 9,685 10,476
Slower VONB growth, sharp deterioration of investment
Net Profit 5,298 5,957 6,651 7,367 performance, slower economic growth in China.
EPS (US$) 0.22 0.54 0.60 0.66
EPS (HK$) 1.70 4.19 4.67 5.17 At A Glance
EPS Gth (%) (59.6) 146.6 11.6 10.6 Issued Capital (m shrs) 12,089
PE (X) 49.6 20.1 18.0 16.3
DPS (HK$) 1.23 1.39 1.55 1.71 Mkt Cap (HK$m/US$m) 1,019,086 / 131,162
Net Div Yield (%) 1.5 1.6 1.8 2.0 Major Shareholders (%)
BV Per Share (HK$) 25.13 31.78 34.89 38.32 Capital Research Global Investors 7.3
P/Book Value (X) 3.4 2.7 2.4 2.2 Free Float (%) 92.7
P/EV (X) 2.4 2.1 1.9 1.7
3m Avg. Daily Val. (US$m) 231.65
ROAE (%) 6.4 14.7 14.0 14.1
GICS Industry: Financials / Insurance
Earnings Rev (%): New New New
Consensus EPS (US$) 0.53 0.59 0.66 Bloomberg ESG disclosure score (2018)^ 46.1
Other Broker Recs: B:20 S:1 H:2
- Environmental / Social / Governance 37.5 / 46.7 / 62.5
Source of all data on this page: Company, DBS Bank (Hong Kong) Limited
^ refer to back page for more information
(“DBS HK”), Thomson Reuters

ed-TH / sa- CS /TW

 Company Guide

AIA Group

WHAT’S NEW additional VONB generated in China may reach US$2.6bn,

It’s only the beginning… taking a 6-year investment horizon till FY25F (see figure 1).

Securing a 32% VONB CAGR for the next six years Fig 2: Estimation of AIA’s fair value
As China regulators will allow full foreign ownership for
insurers by the end of 2020, this basically implies that AIA USD (mil) F Y 17 F Y 18F F Y 19F F Y 20F
China will be able to expand beyond the five geographical V oNB 3,206 3,955 4,352 4,923
areas from 2021 onwards. Given AIA’s strong franchise and V oNB growth 23% 10% 13%
presence in the high-net-worth regions, we see the insurer as V IF 29,805 29,880 32,016 35,785
ANW 20,974 24,637 29,302 33,181
the major beneficiary among foreign insurers of China’s market
EV 50,779 54,517 61,318 68,966
liberalisation.
EV growth 0 7% 12% 12%
PV of additional V ONB from China expansion 2,614
By assuming that a) AIA China will expand into one new area
A djust ed EV 71,579
per year from 2021 onwards, b) agent productivity in new
No. of shares 12,074 12,074 12,074 12,074
areas will take five years to gradually reach the same level as
USD / HKD 7.8
existing areas, c) the headcount and productivity in the five
EV per share (HK D) 32.9 35.3 39.7 46.4
existing geographical areas will grow by 8% and 15% p.a.
Multiple (x) 0 0 0 2.2x
respectively, and d) new areas to follow the same growth
assumption, our simple assumption basically implies that AIA Target price 0 0 0 102.0
China will be able to generate a 32% VONB CAGR in the next Operating ROE 11.8 12.9 13.4 12.8
six years (figure 4). Such robust growth momentum will likely ROEV 17.4 12.6 16.4 16.4
be sustained should AIA China continue to expand into other Closing price (HK$) 79.2
territories. The major risk we see is whether AIA China will be upside 29%
able to recruit enough agents for its new business expansion,
Source: Company data, DBS HK
and maintain high productivity at the same time.
Factoring in the PV of the additional VONB growth potential
Valuation case – AIA’s fair value at HK$102 from the China market, and on the back of AIA’s existing
In order to capture the additional VONB growth opportunity on organic growth, we derive an adjusted embedded value of up
the back of the removal of geographical limitations, we applied to US$71.6bn. Benchmarking also a 2.2x P/EV multiple which is
a two-stage embedded value growth model to derive a fair in line with AIA’s past peak valuation, we estimate AIA’s fair
value for AIA. The first stage of growth trajectory reflects the value to reach HK$102 per share (figure 2).
fair value of AIA’s existing organic growth potential while the
second stage of growth trajectory accounts for the additional Prolonged impact from HK expected but effect to gradually
VONB growth arising from the removal of geographical fade
limitations for its China business. Mainland China Visitors (MCV) currently contribute 50% of
AIA HK’s VONB, with HK accounting for 40% of AIA Group’s
Fig 1: Present value of the additional VONB in AIA China VONB in 1H19. While the impact from HK’s social unrest on
AIA HK’s business may be protracted, we believe the negative
It em/Unit : US$m 2020F 2021F 2022F 2023F 2024F 2025F
effect will gradually dissipate as we move into 2H20F, due to
Additional V ONB lower-base effect. A key indicator and proxy to watch will be
26 106 282 605 1,114 1,875
from China expansion
the visitor arrival numbers from Mainland China, where the
Risk discount rate @ July to September inbound number has contracted by 6% to
26 96 229 442 734 1,113
11% 42%. Nonetheless, the structural demand for China citizens to
F Y 20F PV of diversify their wealth remains. Also, the propensity for high-
2,614
addit ional V ONB net-worth individuals to seek health insurance protection
outside China due to better overseas coverage at lower
Source: DBS HK premiums will persist. Thus, we see the demand from MCV as
Our analysis suggests that AIA will generate an additional being delayed rather than vanishing.
US$106m and US$282m of VONB in China in FY21F and
FY22F respectively, driven by expansion into new areas. By On the other hand, with China’s strong structural growth
applying an 11% risk discount factor (in line with the risk potential, we forecast AIA China to outpace AIA HK to become
discount factor implied in the majority of China insurers’ the main VONB contributor by FY21F, which may also alleviate
embedded values), our estimates suggest that the PV of the the long-term impact from HK’s market uncertainty.

Page 2
 Company Guide

AIA Group

Fig 4: Forecast of AIA China’s Annual New Premium and Value of New Business Value growth

Y ear 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F 2024F 2025F
Ex ist ing f oot print
TWPI (US$m) 1,446 1,599 1,786 2,028 2,383 3,118 4,006 4,643 5,665 6,915 8,443 10,311 12,597 15,393
ANP (US$m) 215 249 311 438 621 873 1,067 1,300 1,615 2,005 2,491 3,093 3,842 4,772
YoY (%) 16% 25% 41% 42% 41% 22% 21.8% 24.2% 24.2% 24.2% 24% 24% 24%
V NB (US$m) 124 166 258 366 536 725 965 1,215 1,515 1,890 2,357 2,940 3,667 4,554
YoY (%) 34% 55% 42% 46% 35% 33% 25.9% 24.7% 24.7% 24.7% 25% 25% 24%
V NB margin (%) 58% 67% 83% 84% 86% 83% 90.4% 93.4% 93.8% 94.2% 94.6% 95% 95% 95%
No. of agent ('000) 15 39 43 46 50 54 59 63 68
YoY (%) 10% 8% 8% 8% 8% 8% 8%
Agent productiv ity (US$'000) 27 30 35 40 46 53 61 70
YoY (%) 11% 15% 15% 15% 15% 15% 15%
New ex pansion area - 1
No. of agent ('000) 1 3 5 7 9 11
YoY (%) 150% 80% 50% 30% 30%
Agent productiv ity (US$'000) 28 34 41 50 61 70
ANP (US$m) 28 85 186 339 534 798
V NB margin (%) 94% 94% 95% 95% 95% 95%
V NB (US$m) 26 80 176 322 509 761
New ex pansion area - 2
No. of agent ('000) 1 3 5 7 9
YoY (%) 150% 80% 50% 30%
Agent productiv ity (US$'000) 28 34 41 50 61
ANP (US$m) 28 85 186 339 534
V NB margin (%) 94% 94% 95% 95% 95%
V NB (US$m) 26 80 176 322 509
New ex pansion area - 3
No. of agent ('000) 1 3 5 7
YoY (%) 150% 80% 50%
Agent productiv ity (US$'000) 28 34 41 50
ANP (US$m) 28 85 186 339
V NB margin (%) 94% 94% 95% 95%
V NB (US$m) 26 80 176 322
New ex pansion area - 4
No. of agent ('000) 1 3 5
YoY (%) 150% 80%
Agent productiv ity (US$'000) 28 34 41
ANP (US$m) 28 85 186
V NB margin (%) 94% 94% 95%
V NB (US$m) 26 80 176
New ex pansion area - 5
No. of agent ('000) 1 3
YoY (%) 150%
Agent productiv ity (US$'000) 28 34
ANP (US$m) 28 85
V NB margin (%) 94% 94%
V NB (US$m) 26 80
New ex pansion area - 6
No. of agent ('000) 1
YoY (%)
Agent productiv ity (US$'000) 28
ANP (US$m) 28
V NB margin (%) 94%
V NB (US$m) 26
A ggregat e V NB (US$m) 124 166 258 366 536 725 965 1,215 1,541 1,996 2,640 3,545 4,781 6,429
YoY (%) 34% 55% 42% 46% 35% 33% 26% 27% 30% 32% 34% 35% 34%
A ddit onal V NB generat ed (US$m) 26 106 282 605 1,114 1,875

Source: Company data, DBS HK

Page 3
 Company Guide

AIA Group

Value of new business

CRITICAL FACTORS TO WATCH US$ m
74.2%
5,000

Critical Factors 4,000 69.2%

Value of new business (VONB): 3,000

64.2%
VONB is a major share price catalyst. AIA has built a strong 2,000
track record of delivering robust VONB growth in the past few 59.2%
1,000
years. The correlation between VONB and AIA’s share price has
0 54.2%
been strong, reaching 0.94 since 2012. 2017A 2018A 2019F 2020F 2021F

Value of new business Value of new business margin

Hong Kong and China together contributed 69% of the

group’s VONB in 1H19. Hong Kong is the group's largest Net Investment return
VONB driver, contributing 40% of its total VONB followed by 9.0%
8.5%
China with 29%. The importance of these two regions has 8.0%
increased significantly since 1H12, rising from 12% in China 7.5%
7.0%
and 27% in Hong Kong to 29% and 40% of total VONB, 6.5%
respectively. 6.0%
5.5%
5.0%
Value of new business margin (VONBM): 4.5%
4.0%
While AIA has continued to deliver robust VONB growth in the 2017A 2018A 2019F 2020F 2021F

past few years, VONBM is critical as it determines the VONB Net investment return Total investment return

created from any new initiative. We believe the fast-growing

business in China (93% VONB margin in 1H19) is the basis for Group embedded value
US$ m

maintaining a high VONBM as this is higher than the margin at 20%

70,000 18%
the group level. The correlation between AIA’s VONBM and 60,000 16%
14%
share price has been strong, reaching 0.90 since 2012. 50,000
12%
40,000 10%
30,000 8%
Return on embedded value (ROEV): 20,000
6%
4%
With AIA being valued at price-to-embedded value (P/EV) basis, 10,000 2%
0 0%
the level of ROEV that AIA is delivering is therefore critical to its 2017A 2018A 2019F 2020F 2021F

valuation. AIA has managed to improve the return on Group embedded value (mn) (LHS) yoy growht (%) (RHS)
embedded value (ROEV) from low teens (11.5%/12.5% in
2010/2011) to a mid-teen level (16.3% in 2018). We forecast Source: Company, DBS HK
ROEV to climb further to 16.5%/16.9%/17.4% in
FY19F/20F/21F.

Investment portfolio performance:

AIA had a sizeable investment portfolio of US$21.6bn as of
1H19. Fluctuations in the financial markets are vital to the
group's earnings performance and embedded value growth.
Even in the volatile equity market in 1H19, the company
recorded an investment return variance of US$1.6bn.

Page 4
 Company Guide

AIA Group

Appendix 1: A look at Company's listed history – what drives its share price?

Critical factor #1 – Value of New Business (VONB)

HK$ US$ mil

90 1,400 AIA’s VONB has a
80 1,200 significantly high
70 positive correlation of
1,000
60 0.94 with its historical
50 800 share price
40 600 movement. Thus, its
30 VONB growth can be
400
20 considered as the key
10 Correlation since 2012 = 0.94 200
critical factor to its
0 0 share price
Dec-11

Dec-12

Dec-13

Dec-14

Aug-15
Dec-15

Aug-16
Dec-16

Dec-17

Dec-18
Aug-12

Aug-13

Aug-14

Aug-17

Aug-18

Aug-19
Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18

Apr-19
AIA share price (LHS) AIA's VONB (RHS)

Source: DBS HK, Company Data

Critical factor #2 – Value of New Business Margin (VONBM)

HK$ VONB can be

90 70%
decomposed by VONB
80 60% margin times ANP
70
50% (annualised new
60
50 40% premiums). While ANP
40
may differ due to
30%
30 different product
20% launch/design, we also
20 Correlation since 2012 = 0.90
10 10% see AIA’s VONB margin
0 0% as having a high
positive correlation of
Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Aug-19
Aug-12

Aug-13

Aug-14

Aug-15

Aug-16

Aug-17

Aug-18
Apr-18
Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-19

0.9 to its historical

share price.
AIA share price (LHS) AIA's VONB margin

Source: DBS HK, Company Data

Page 5
 Company Guide

AIA Group

Balance Sheet:
Solvency ratio
Solvency: AIA’s solvency ratio decreased from 421% in FY18 to
415% in 1H19, which is still substantially higher than the
minimum solvency margin of 150% required by the Hong 420.0%

Kong Insurance Authority (HKIA). 370.0%

Leverage: AIA’s leverage level, measured as total assets/total 320.0%

equity, was 5.1x in 1H19, down from 5.8x as at end-FY18. 270.0%

220.0%

Share Price Drivers: 170.0%

2017A 2018A 2019F 2020F 2021F
VONB is the major share price driver. AIA has built a strong
track record of delivering robust VONB growth in the past few
years. The correlation between its VONB and share price has ROE
been strong, reaching 0.94 since 2012. 14.0%

VONBM is critical to AIA's share price performance. While AIA 12.0%

has continued to deliver robust VONB growth for the past few 10.0%

years, VONBM is critical as it determines the VONB created 8.0%

from any new initiative. We believe the growing business in

6.0%

4.0%
China is the basis for maintaining a high VONBM as it delivers a
2.0%
VONBM which is higher than the group's margin. 0.0%
2017A 2018A 2019F 2020F 2021F

Key Risks:
Increase in pricing competition would affect the group’s new
PEV Band
business margin. Severe economic slowdown in China is also a 2.6 (x)

risk. 2.4

+2sd: 2.3x
2.2
Environment, Social, Governance: +1sd: 2.1x
2.0 Avg: 2x
The environment has a direct impact on the health of -1sd: 1.9x
customers and thus influences the businesses of the company.
1.8
-2sd: 1.8x

AIA has been making efforts to fight pollution and climate 1.6

change by proactively conserving the usage of resources and 1.4

Jan-18 Jul-18 Jan-19 Jul-19 Jan-20

investing in green bonds and infrastructure-related sectors. In

2018, the companies invested US$575m in green bonds, and
US$24bn in infrastructure. PB Band
(x)
3.3

As a life insurance company, customers’ health and well-being 3.1

+2sd: 2.97x
have a direct impact on earnings. Therefore, AIA Vitality 2.9
+1sd: 2.79x
(health and wellness programme) is devoted to combat health 2.7
Avg: 2.6x
2.5
challenges. In 2018, 21% of members reduced their BMI from 2.3
-1sd: 2.41x

unhealthy to healthy levels, while 56% of members improved 2.1

-2sd: 2.23x

their blood pressure from unhealthy to healthy readings. 1.9

Jan-18 Jul-18 Jan-19 Jul-19 Jan-20

Risk management is one of the key elements of the

company’s businesses. AIA’s Risk Management Framework
Source: Company, DBS HK
(RMF) ensures the capabilities to identify, quantify, monitor
and report risks, and prepares sufficient capital based on
scenario testing and analysis to provide protection to its
policyholders and the business continuity.

Company Background
AIA was established in Shanghai in 1919. It was listed on
HKEX in 2010 after its reorganisation as a result of AIG's
liquidity crisis in 2008. AIA focuses on the Asia Pacific region
and has a presence in 18 markets. At end-2018, its total
assets and equity were at US$23bn and US$4bn respectively.

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Company Guide

AIA Group

Key Assumptions
FY Dec 2017A 2018A 2019F 2020F 2021F

Total weighted premium growth N/A 15.7 10.9 12.4 13.2

VNB growth 0.0 23.4 10.0 13.1 16.7
VNB margin 57.0 60.8 65.0 66.4 67.8
Net investment return 4.8 4.8 4.6 4.6 4.6
Total investment return 8.5 4.8 4.6 4.6 4.6
EV growth 19.0 7.4 12.5 12.5 12.8
Solvency ratio 446.1 420.6 427.6 426.7 424.9

Source: Company, DBS HK

Income Statement (US$ m)
FY Dec 2017A 2018A 2019F 2020F 2021F

Total weighted premium income 26,393 30,543 33,886 38,096 43,119

Gross written premiums 0 0 0 0 0
Net earned premium 25,941 29,716 31,280 34,801 39,352
Investment income 7,189 8,076 8,861 9,685 10,476
Other operating income 0 0 0 0 0
Total income 33,130 37,792 40,140 44,485 49,828

Benefits and claims (21,646) (24,931) (26,100) (28,937) (32,592)

Underwriting and policy acquisition costs (3,443) (3,778) (4,082) (4,485) (4,981)
Finance cost (400) (475) (490) (507) (522)
Other expenses (2,036) (2,171) (2,348) (2,596) (2,894)
Total expenses (27,525) (31,355) (33,021) (36,524) (40,989)

Share of profit of associated and JVs 0 0 0 0 0

Profit before tax 5,605 6,437 7,120 7,961 8,838
Income tax expense (917) (1,094) (1,128) (1,274) (1,436)
Minority interest (35) (45) (35) (35) (35)
Preferred dividend 0 0 0 0 0
Net income attributable to shareholders 4,635 5,298 5,957 6,651 7,367

Source: Company, DBS HK

Balance Sheet(US$ m)
FY Dec 2017A 2018A 2019F 2020F 2021F

Total Investment 162,686 171,339 190,551 206,799 225,083

Property, plant and equipment 1,225 1,233 3,083 3,083 3,083
Other assets 54,735 57,234 66,102 72,844 80,431
Total assets 218,646 229,806 259,735 282,725 308,597

Net life reserves - traditional 151,475 164,764 181,304 199,433 219,936

Net life reserves - investment contracts 8,210 7,885 7,885 7,885 7,885
Other Liabilities 15,405 17,751 20,780 20,780 20,780
Total liabilities 175,090 190,400 209,969 228,098 248,601

Shareholder's equity 43,176 39,006 49,331 54,157 59,491

Minority interest 380 400 435 470 505
Total equity 43,556 39,406 49,766 54,627 59,996

Source: Company, DBS HK

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Company Guide

AIA Group

Key Financials & Ratios

FY Dec 2017A 2018A 2019F 2020F 2021F

Du Pont analysis (%)

Net profit / premium income 25.0 10.1 20.7 20.8 20.3
Premium income / total asset 11.9 12.9 12.0 12.3 12.8
Total asset / total equity 5 6 5 5 5
Return on equity 7.9 6.4 14.7 14.0 14.1

Embedded value(US$ m)
Book value 43,176 39,006 49,331 54,157 59,491
Adjusted items (22,202) (14,369) (20,029) (20,977) (22,024)
Adjusted book value 20,974 24,637 29,302 33,181 37,467
Value-in-force 29,805 29,880 32,016 35,785 40,317
Group embedded value 50,779 54,517 61,318 68,966 77,784

Per share analysis(US$)

EPS 0.54 0.22 0.54 0.60 0.66
BPS 3.58 3.23 4.08 4.48 4.93
DPS 0.13 0.16 0.18 0.20 0.22
EVPS 4.21 4.51 5.08 5.71 6.44

Capital Strength (%)

Leverage ratio 0 0 0 0 0
Solvency ratio 446.1 420.6 427.6 426.7 424.9

Source: Company, DBS HK

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 Company Guide

AIA Group

^ Bloomberg ESG Disclosure Scores rate companies annually based on their disclosure of quantitative and policy-related ESG data. It is based on a
scoring scale of 0-100, and calculated using a subset of more than 100 raw data points it collects on ESG. It is designed to measure the robustness
of companies' disclosure of ESG information in their reporting/the public domain. Based on Bloomberg disclosures, as of 25 Jan 2019, the global
ESG disclosure average score is 24.92 and 22.14, 28.26, 49.97 for Environmental, Social and Governance, respectively.
DBS HK recommendations are based on an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return, i.e., > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable share price catalysts within this time frame)

*Share price appreciation + dividends

Completed Date: 7 Jan 2020 12:29:38 (HKT)

Dissemination Date: 7 Jan 2020 16:29:12 (HKT)
Sources for all charts and tables are DBS HK unless otherwise specified.
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank (Hong Kong) Limited (“DBS HK”). This report is solely intended for the clients of DBS Bank Ltd., DBS HK, DBS
Vickers (Hong Kong) Limited (“DBSV HK”), and DBS Vickers Securities (Singapore) Pte Ltd. (“DBSVS”), its respective connected and associated
corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii)
redistributed without the prior written consent of DBS HK.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd., DBS HK, DBSV HK, DBSVS, its respective connected and associated corporations, affiliates and their respective directors, officers,
employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or
sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we
do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions
expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document
does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is
for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain
separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss
(including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation
to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along
with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document.
The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform
broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may
not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to
update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned
schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED
UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.
DBS Vickers Securities (USA) Inc (“DBSVUSA”), a US-registered broker-dealer, does not have its own investment banking or research department,
has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past
twelve months and does not engage in market-making.

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AIA Group

ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s)
primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not serve as an officer of
the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the
real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the
management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or
his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has
procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of
research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment
banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment
banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the
DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd, DBS HK, DBSVS or their subsidiaries and/or other affiliates have a proprietary position in AIA Group Ltd (1299 HK)
recommended in this report as of 03 Jan 2020.

2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research
Report.

3. Compensation for investment banking services:

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities
as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to
obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security
discussed in this document should contact DBSVUSA exclusively.

4. Disclosure of previous investment recommendation produced:

DBS Bank Ltd, DBSVS, DBS HK, their subsidiaries and/or other affiliates of DBSVUSA may have published other investment
recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12
months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations
published by DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA in the preceding 12 months.

1
An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person
accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2
Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a
new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term
does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new
listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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AIA Group

RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.
Australia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial
Services Licence no. 475946.

DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the
Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are
regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong
Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws.

Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers (Hong Kong)
Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures Commission to carry out the
regulated activity of advising on securities.

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.
Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised
that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected
and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any
of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek
to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also
have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and
other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,
or in connection with the report.
Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.
United This report is produced by DBS HK which is regulated by the Hong Kong Monetary Authority
Kingdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd (“DBSVUK”). DBSVUK is authorised
and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and
associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any
form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at
persons having professional experience in matters relating to investments. Any investment activity following from this
communication will only be engaged in with such persons. Persons who do not have professional experience in matters
relating to investments should not rely on this communication.
Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608-610, 6th Floor, Gate
International Precinct Building 5, PO Box 506538, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank
Financial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for
Centre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

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AIA Group

United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined
Emirates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes
only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell
any financial product. It does not constitute a personal recommendation or take into account the particular investment
objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment
adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the
information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This
report or any portion thereof may not be reprinted, sold or redistributed without our written consent.
United States This report was prepared by DBS HK. DBSVUSA did not participate in its preparation. The research analyst(s) named on this
report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research
analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company,
public appearances and trading securities held by a research analyst. This report is being distributed in the United States by
DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional
Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may
authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should
contact DBSVUSA directly and not its affiliate.
Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Bank (Hong Kong) Limited

th
13 Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong
Tel: (852) 3668-4181, Fax: (852) 2521-1812

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Company Guide
AIA Group
DBS Regional Research Offices
HONG KONG
DBS Bank (Hong Kong) Ltd
Contact: Carol Wu
13th Floor One Island East,
18 Westlands Road,
Quarry Bay, Hong Kong
Tel: 852 3668 4181
Fax: 852 2521 1812
e-mail: dbsvhk@dbs.com
INDONESIA
PT DBS Vickers Sekuritas (Indonesia)
Contact: Maynard Priajaya Arif
DBS Bank Tower
Ciputra World 1, 32/F
Jl. Prof. Dr. Satrio Kav. 3-5
Jakarta 12940, Indonesia
Tel: 62 21 3003 4900
Fax: 6221 3003 4943
e-mail: indonesiaresearch@dbs.com
MALAYSIA SINGAPORE
AllianceDBS Research Sdn Bhd DBS Bank Ltd
Contact: Wong Ming Tek (128540 U) Contact: Janice Chua
19th Floor, Menara Multi-Purpose, 12 Marina Boulevard,
Capital Square, Marina Bay Financial Centre Tower 3
8 Jalan Munshi Abdullah 50100 Singapore 018982
Kuala Lumpur, Malaysia. Tel: 65 6878 8888
Tel.: 603 2604 3333 Fax: 65 65353 418
Fax: 603 2604 3921 e-mail: equityresearch@dbs.com
e-mail: general@alliancedbs.com Company Regn. No. 196800306E
THAILAND
DBS Vickers Securities (Thailand) Co Ltd
Contact: Chanpen Sirithanarattanakul
989 Siam Piwat Tower Building,
9th, 14th-15th Floor
Rama 1 Road, Pathumwan,
Bangkok Thailand 10330
Tel. 66 2 857 7831
Fax: 66 2 658 1269
e-mail: research@th.dbs.com
Company Regn. No 0105539127012
Securities and Exchange Commission, Thailand
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