Temporary anti-dumping measures on ethanolamine products produced in the Malaysia, Saudi Arabia, Thailand and the United States is also being introduced.
PETALING JAYA: The reversion to the sales and services tax (SST) will only be mildly positive for Syarikat Takaful Malaysia Keluarga Bhd
due to lower good and services tax (GST) input cost and lower medical claims expense.
UOB Kay Hian on Monday said that the group’s management had indicated that the transition back to the SST would only be mildly positive as lower GST input cost is estimated at less than 1% on earnings.
Also, it noted that the impact on lower claims was unlikely to be significant as overall medical cost is unlikely to be reduced significantly, coupled with the fact that medical premiums only constituted 16% of group gross premiums.
The transition back to the SST may also result in lower overall pricing for non-life retail insurance products as they were not subjected to SST in the previous tax regime, the research house said.
“Naturally, one would expect this to have a positive effect on demand. However, as motor and fire insurance, which are the two major general insurance products, are largely mandatory in nature, overall demand is unlikely to increase despite the implementation of zero-rated GST unless demand for residential property and passenger vehicles were to increase significantly.
“During the implementation of the GST on non-life insurance products back in 2015, premiums growth for fire and motor was relatively stable while personal accident plans, which is more discretionary in nature, saw a decline,’’ it added.
UOB Kay Hian, which is maintaining a hold on the counter with a target price of RM4.35, said Syarikat Takaful Malaysia’s second quarter results
were in line with expectations.
The stronger than expected premium growth was offset by a higher than expected claims ratio and weaker investment income due to increased volatility in capital markets.
The country’s oldest takaful player recorded a higher net profit of RM50.42mil for the second quarter ended June 30, 2018 versus RM45.07mil registered in the previous corresponding period.
Revenue for the quarter under review increased to RM542.43mil from RM485.34mil previously.
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