Takaful Malaysia experiences robust first half earnings on higher wakalah, surplus transfer

KUCHING: Syarikat Takaful Malaysia (Takaful Malaysia)’s first half of financial year 2012 (1HFY12) annualised core net profit lifted by higher wakalah fees and surplus transfer from its family takaful business.

Its core net profit, which grew 24.3 per cent year-on-year (y-o-y) to RM47.9 million, was boosted by significantly higher wakalah fees (up 117.4 per cent y-o-y) and stronger top-line growth (gross contributions, up 53.4 per cent y-o-y) and had exceeded OSK Research Sdn Bhd’s (OSK Research’s) expectations, accounting for 63.6 per cent of its full-year estimates.

In its research note yesterday, it stated, “We gather from management that its bankatakaful tie-ups with Malaysia Building Society Bhd (MBSB) and Bank Islam Malaysia made good progress as its partners were aggressively rolling out its group credit wakalah (takaful coverage for personal financing) and mortgage reducing term takaful (MRTT, similar to MRTA) products.

“We believe that Takaful Malaysia’s strategic tie-up with MBSB will continue to fuel top-line growth as we are bullish on growth of the latter’s personal financing loans.

“Also, we understand from management that it is currently pitching to two local financial institutions in relation to strategic tie-ups to expand the group’s top-line by as much as RM500 million a year.”

Takaful Malaysia declared a first interim dividend of 15 sen last week, making up 71.4 per cent of OSK Research’s total net dividend forecast.

The research house expected another dividend payout of six sen (an increase of five per cent from its previous forecast) on the assumption of a 40 per cent payout ratio, as it gathered from Takaful Malaysia that the latter would continue to reward shareholders.

On the back of the encouraging growth, the research house boosted earnings estimates for FY12 and FY13 by 13.8 per cent and 19.1 per cent respectively, without taking into consideration the potential contribution from the new tie-ups.

Premised on the new pegging upgrade to 12 times FY13 earnings per share, OSK Research boosted the fair value of the stock from RM5.50 per share to RM8 per share, representing a potential upside of 24.6 per cent.

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