Sands Capital Management, LLC - Emerging Markets Growth Composite on AIA Group Limited
Thesis
AIA is the largest pan-Asian life insurer by market share and the fund believes recent multiple compression is excessive. Regulation affecting mainland Chinese visitors has hurt sentiment, but that channel represents only about one-fifth of overall new business value. Sands expects the remainder of the franchise to sustain healthy growth through diversified market exposure and resilient demand across Asian life-insurance markets. Greater regulatory clarity and solid operating results could improve sentiment. The thesis is that the market is over-discounting a specific channel risk relative to AIA's broader growth and cash-generation profile.
“We believe the multiple compression is overstated.”
Key risks
- Tighter cross-border regulation could continue to pressure the mainland Chinese visitor business
- Negative sentiment toward the visitor channel could keep the valuation compressed