Guinness Asian Equity Income Fund on Aflac
Thesis
Aflac's second-quarter earnings were pressured, but the fund views the share-price weakness as more reflective of a reassessment of earnings growth than deterioration in balance-sheet quality. Japanese sales and premiums were weaker, while Japanese pre-tax adjusted earnings increased and margins improved. The company also continued substantial capital returns, including $983 million of second-quarter share buybacks.
“The subsequent share price weakness looks less like a deterioration in balance sheet quality and more like a reassessment of earnings growth following a strong run.”
Key risks
- Slower earnings growth
- Weakness in Japanese premiums and sales
- Currency effects from the yen