KUALA LUMPUR: CIMB Equities Research sees the potential for Maybank’s group insurance and takaful business to grow in overseas markets, principally in Singapore, Indonesia and the Philippines, where Maybank has strong footholds in commercial banking.
It said on Thursday Etiqa can leverage on Maybank’s regional network for growth in overseas markets.
“It has shown positive results in this regard as out of Etiqa’s gross premium of RM6.2bil in 2017, RM900mil was generated from Singapore and RM200mil from the Philippines,” it said.
Maybank hosted an investor day on Wednesday for its group insurance and takaful business. The information we gathered from the event reaffirmed our positive stance on
Maybank said Etiqa is the fastest-growing insurance/takaful company in Malaysia year-to-date in all segments, including life insurance, family takaful, general insurance and general takaful.
“This reaffirmed our positive view on Maybank’s insurance business,” it said.
CIMB Research lowered its EPS forecasts by 0.5% for FY18F and 1% for FY19-20F as it increased its assumed share base from 10.9 billion to 11 billion, mainly to factor in the 104.5 million new shares issued under the dividend reinvestment plan (DRP).
For its dividend discount model, it also updated the assumed beta upwards from 1.02 to 1.09 (source: Bloomberg). This, coupled with EPS cut, reduces its DDM-based target price from RM10 to RM9.85.
“While we are positive on the growth prospects for Maybank’s insurance as well as Islamic banking businesses, we think that these could be partly offset by the weak expansion of its commercial banking operations, impacted by slow loan growth and margin erosion.
“As such, we continue to rate Maybank a Hold, partly premised on its attractive dividend yield of a projected 5.9% in FY19F. We prefer RHB Bank for exposure to Malaysian banks,” CIMB Research said.