KUALA LUMPUR: CIMB Research has maintained its “add” rating on Syarikat Takaful Malaysia Bhd (STM) given its potential re-rating catalysts.
“We continue to rate an ‘add’, given the potential re-rating catalysts of good growth prospects in the Takaful industry, bright earnings outlook with projected earnings per share (EPS) growth of 16.8% in FY16 and 12.3% in FY17, and one of the strongest return on equity of 25-26% among the financial services stocks in Malaysia,” it said, adding that it has retained its EPS forecasts and DDM-based target price.
CIMB said STM management sees a stable outlook for the Takaful industry in 2016. It said the strong growth in this segment would partly come from the cannibalisation of the conventional insurance premiums. It is aiming for a gross contributions (premium) growth of 15% in 2016, which is higher than CIMB’s projected 10.7%
“The company sees good prospects for growth in the medical and SME segments. In terms of channel of distribution, the growth in 2016 would emanate from banks, riding on the swift expansion of Islamic loans.
“In 2015, Islamic banking loans expanded by a swift 16.3% compared to a growth of only 7.9% for the banking system,” CIMB said.
STM has maintained a strong surplus in December 2015 at RM782.6mil for family participants’ funds, and RM223mil for general takaful risk funds. These provide solid buffers for the company to grow its businesses and compete on pricing.
TAKAFUL (6139) - Potential re-rating for Syarikat Takaful
http://www.thestar.com.my/business/business-news/2016/04/01/potential-re-rating-for-syarikat-takaful/
