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Prudential: Solid Credit But China Weakness May Pressure Peer Credits
Prudential (PRU LN) 2H23 results look solid but growth indicators in China are weak which may pressure the credit of AIA, HSBC and StanChart today. The size of China CRE is sized here (USD1.2bn direct) without giving indications of its performance recently.
- Key credit metrics: GWS (group wide supervision) surplus over requirement is USD19bn (197%), up from USD18.2bn (194%) at Jun-23 and group operating free surplus generation was only marginally lower in the second half. These look solid, in our view.
- Operating metrics: new business profit was up 50% y/y in 2H23 (14% ahead of consensus). APE sales were up 30% (6% ahead of consensus) driven by HK but China JV with CITIC was very weak, alongside Indonesia. Net profit was up 50% y/y but lower than 1H23 and missed consensus by 29%.
- Outlook: indications are scant with only indication that “sales growth has continued” in first two months of 2024. Other indicators, especially around China and Vietnam look relatively muted, we feel.
Conf call at 0830 (London) at: https://www.investis-live.com/prudential/65d362b6d0d520120026534a/taer
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.