KUCHING: As a good proxy to the takaful industry, Syarikat Takaful Malaysia Bhd (Takaful Malaysia) should continue to capture market share by leveraging on its unique position as competitors face possible consolidation and capital constraints.
RHB Research Institute Sdn Bhd (RHB Research) Takaful Malaysia is the sole listed proxy to the Islamic insurance industry, a sector that has charted higher comulative annual growth rate (CAGR) versus conventional insurance since 2009.
“This was partly on the sector’s low penetration rate at 0.7 per cent of gross national income (GNI) versus the overall insurance and takaful’s 4.9 per cent,” it explained yesterday.
Takaful Malaysia captured close to about 22 per cent of the combined general (GT) and family takaful (FT) market in FY13, it said, in addition to maintaining a 40 per cent market share in
group FT despite the household debt cooling measures since 1H13.
“We believe Takaful Malaysia’s 15 per cent revenue and earnings growth target is intact. However, 1Q14 results could demonstrate temporary growth weakness in its credit wakalah products, as contributions from a key bancatakaful partner reduced to a FT low of five per cent from 1H13’s 20 per cent.
“However, we see an offsetting factor from bancatakaful for mortgage reducing term takaful (MRTT), which has picked up momentum.
“We expect GT to chart better growth, as we view that Takaful Malaysia can compete more effectively with its unique proposition. Also, some of its competitors are facing consolidation and capital constraints.”
This led RHB Research to maintain a buy on Takaful Malaysia with a fair value of RM15 per share, pegged to 13 times FY15F price earnings ratio.
“While our fair value implies a 3.4 times FY15F price to book value, we deem this fair given its superior return on equities (ROEs) against its peers.”
Notably, Takaful Malaysia’s shareholders’ value has seen higher institutional participation on its higher dividend payouts, ROEs and capitalisation. This led RHB Research to maintain its forecasts, but expect the company to issue a final dividend instead of several interim dividends.