Takaful Malaysia’s 9MFY17 earnings within expectation
KUCHING: Syarikat Takaful Malaysia Bhd’s (Takaful Malaysia) earnings for its first nine months of financial year 2017 (9MFY17) have come within analysts’ estimates as the group’s growth continues unabated.
As per a filing on Bursa Malaysia, Takaful Malaysia’s profit after tax for the nine months ended September 30, 2017 amounted to RM149.4 million, up 10 per cent from the corresponding period of the previous year. Takaful Malaysia’s 9MFY17 earnings came in within the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) expectation, accounting for 76.7 per cent and 75.6 per cent of its and consensus full year forecast.
Moving forward, MIDF Research viewed the demand for Takaful Malaysia’s general takaful product is still resilient given the higher net Wakalah fee income especially from General business, despite the pressure from Bank Negara Malaysia’s (BNM) second phase liberalization which commenced in July 2017.
The research arm also viewed that Takaful Malaysia’s combined ratio will remain healthy underpinned by the group’s robust underwriting practice.
As the results came in within the research arm’s estimates, MIDF Research maintained its earnings forecast at this juncture.
Consequent to the result, MIDF Research maintained its ‘buy’ call on Takaful Malaysia. The research arm’s target price also remained unchanged at RM4.90 per share as it pegged Takaful Malaysia’s financial year 2018 (FY18) earnings per share (EPS) to price earnings ratio (PER) of 19-fold (one standard deviation above the group’s fiveyear historical average).
“The higher than average industry’s PER is believed to be justified given the group’s strong presence in the Family Takaful market, with the largest market share coupled with the low life/takaful penetration rate circa 56.2 per cent (versus 75 per cent target by 2020),” it said.
Consequently, MIDF Research was optimistic that Takaful Malaysia will continue the group’s forward momentum despite the growing competition following liberalisation.