CGS International
July 18, 2025

Prudential PLC: Hidden Value Beyond India Drives Bullish Outlook and Sector Leadership

Prudential PLC’s Intrinsic Value: More Than Just the India Story

Prudential PLC (Pru) stands out in the Asian life insurance sector, with its market capitalisation significantly influenced by its Indian operations. As of July 17, 2025, a notable 29% of Pru’s market cap is attributed to its stakes in Indian associates. This is despite the Indian life business representing just 3% of FY24 new business profits and the Indian asset management company (AMC) contributing only 6% of FY24 net profits. The disconnect between valuation and earnings contribution underscores significant underappreciation of Pru’s non-Indian operations, particularly its robust Hong Kong business.

India: A Valuation Catalyst for Prudential

The imminent listing of Prudential’s 49%-owned Indian AMC, ICICI-Prudential AMC, has been a major catalyst, shining a light on the hidden value of Pru’s Indian business. Key milestones include:

• ICICI-Prudential AMC – India’s second-largest asset manager by AUM – is preparing to raise US\$1.2bn in its IPO, commanding a 13% market share in quarterly average AUM and a customer base of 14.6 million.
• Pru will divest up to 10% of its equity stake in the AMC through the IPO and an additional 2% to ICICI Bank prior to listing.
• Comparable peer HDFC AMC trades at a one-year forward P/E of 42.9x, up from 18.6x in March 2023, reflecting the rising multiples in the Indian market.
• Pru’s 22% stake in ICICI-Prudential Life Insurance is valued at US\$2.4bn (P/E: 68.9x), while the 49% stake in the AMC is estimated at US\$6.7bn, collectively accounting for 29% of total market cap.

Hong Kong: An Undervalued Growth Engine

Despite the market’s India focus, Prudential’s Hong Kong business remains a powerhouse:

• Accounts for 32% of FY24 operating profit after tax
• Generated 43% of FY24 new business profit
• Represents 40% of FY24 embedded value

Investor attention remains subdued, even as Hong Kong insurance demand is fueled by mainland Chinese visitors and new migrants. CGS International reiterates an Add rating and maintains a sector-leading target price (TP) of HK\$142, with 48% upside potential.

Financial Snapshot: Robust Growth and Attractive Multiples

Regional Profit and Value Mix

Prudential’s FY24 breakdown by region highlights the strength of Hong Kong and Singapore:

• Operating profit after tax: HK 32%, Singapore 20%, Mainland China 12%, Malaysia 9%, Indonesia 7%, Growth markets and other 18%.
• New business profit: HK 43%, Singapore 17%, Mainland China 9%, Malaysia 4%, Indonesia 4%, Other 23%.
• Embedded value: HK 40%, Singapore 18%, Mainland China 8%, Malaysia 9%, Indonesia 4%, Growth markets and other 21%.

Valuation Methodology and Upside Potential

CGS International values Prudential on a blended basis, assigning equal weight to P/BV and P/EV GGM methodologies. Key assumptions include:

• Cost of equity: 10.3%
• Terminal growth rate: 3.5%
• Sustainable ROEV: 14.6%
• Sustainable ROE: 15.6%
• FY25F EVPS: US\$13.7
• FY25F BVPS: US\$7.8

The derived target price is HK\$142, implying 48% upside from the current price of HK\$96.25.

Comparative Analysis: Sector Peers

Pru’s valuation stands out, with a 48% upside potential and competitive multiples relative to its sector peers.

Strategic Outlook: Key Catalysts and Risks

CGS International expects Prudential to deliver accelerating new business profit (NBP) and dividend per share (DPS) growth from FY25 to FY27, with the following catalysts:

• Strong insurance demand in Hong Kong, driven by mainland Chinese customers and migrants.
• Ongoing capital management initiatives and share buybacks.
• Potential for further valuation uplift as investors appreciate the true value of non-Indian operations.

Risks include sensitivity to investment yields, regulatory changes, and continued market focus on P/E and P/BV metrics rather than embedded value, which could limit share price re-rating.

ESG Commitment: A Positive Driver for Valuation

Prudential has made significant strides in environmental, social, and governance (ESG) initiatives:

• LSEG ESG combined score of A- in 2023 (2022: B+).
• Commitment to net zero by 2050 with a 25% reduction in carbon emissions by 2025 and full divestment from coal-related investments.
• Strong governance and social pillar scores, with a focus on gender diversity – 35% female representation in senior leadership as of 2021.
• 2024 MSCI ESG rating of AA and Sustainalytics ESG Risk Rating of 17.2.

The group’s ESG progress is expected to further enhance its market valuation.

Conclusion: Prudential PLC Poised for Re-Rating

Prudential PLC’s share price appreciation in 2025, up 58% YTD, reflects growing recognition of its Indian business value, but the underlying strength of its Hong Kong and broader Asian franchise remains underappreciated. With robust profit growth, sector-leading embedded value, and strategic ESG initiatives, Pru stands out as a top sector pick with significant upside potential.

Recommendation Framework

Add: Total return expected to exceed 10% over the next 12 months. Hold: Expected return between 0% and +10%. Reduce: Return expected to fall below 0%. Sector: Overweight, Neutral, Underweight classifications based on aggregate market cap-weighted recommendations.

Company Coverage and Analyst Contacts

• Analysts: Michael Chang, CFA, and Laura Li Zhiyi
• Major shareholders: Blackrock (8.2%)
• Current share price: HK\$96.25 | Target price: HK\$142.00 | Market cap: US\$31.65bn

This in-depth sector and company analysis provides investors with a comprehensive view of Prudential PLC’s valuation, growth prospects, ESG leadership, and its standing among Asia’s leading life insurers.