The research house reiterated its buy rating as it believes STMK, with its prudent underwriting policies, gives investors some comfort given management's good execution in the Takaful business.
For 2020 and 2021, Affin Hwang expects the robust growth rate seen so far in 2019 to moderate due to a weaker economic growth outlook.
"We foresee some downside risks coming from lower vehicle sales, a weak housing market and high medical and motor claims costs, which will likely be more pronounced in 2020-2021," it said.
The research house lowered its earnings growth estimates to 4.3% and 7.5% year-on-year in 2020-21E, versus its previous forecast of 10-15%. Consequently, its target price for the stock decreased to RM7.80, from RM8.40 previously.
However, Affin Hwang said the group would remain resilient, underpinned by its competitive edge as the preferred Takaful partner, lower-than-industry claims ratio, shift towards Islamic banking and successful online market penetration.
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