CIMB Securities Research has maintained its FY25 to FY27 earnings forecasts.
PETALING JAYA: Analysts are still positive about Syarikat Takaful Malaysia Keluarga Bhd
(STMB) despite it posting a net profit slightly below their estimates in the first quarter ended March 31, 2025, mainly due to a higher-than-expected effective tax rate.
RHB Research has kept its “buy” call on the counter but lowered its target price to RM4.10 from RM4.60 previously.
It has also trimmed earnings for the financial years ending 2025 to 2027 (FY25-FY27) by 4%, taking into account a higher effective tax rate of 35% versus 32% previously.
“STMB is our top pick among insurers under our coverage, given that it is better shielded from regulatory developments on medical insurance/takaful, providing a welcome buffer against an expected industry-wide decline in net investment income,” it said.
The research house added that STMB’s solid new business value growth in 1Q25 reinforced its view that the group is well-shielded from Bank Negara’s premium repricing cap on medical health insurance and takaful or MHIT products.
“This is due to STMB’s relatively small direct exposure to the MHIT segment (9% of FY24 gross contributions) while its indirect exposure to this business via employee benefits agreements are ‘safer’, as such agreements are renegotiated and repriced annually,” RHB Research explained.
However, it expected challenges for investment income in FY25, especially if the heightened market uncertainty is prolonged.
“Nevertheless, we think the group can still eke out mid-single-digit earnings growth, powered by an improvement in underwriting margins as STMB’s claims containment initiatives bear fruit,” RHB Research added.
Meanwhile, CIMB Securities Research has maintained its FY25 to FY27 earnings forecasts, while keeping its target price of RM4.60.
“We expect STMB’s earnings outlook to be supported by strong demand for credit-related products, which account for about 75% of family takaful contributions,” it said.
The research house said the strong demand would be driven by the Bancatakaful segment, which accounts for around 65% of total contributions and the Lembaga Pembiayaan Perumahan Sektor Awam channel.
CIMB Securities pointed out that at the current price, STMB was trading at an attractive FY26 price-to-book value of 1.2 times, which is about 40% below the five-year mean of two times.
“We believe the discount is unjustified given STMB’s superior return on equity of 19% – which is about 2.2 to 6.8 percentage points higher than that of its listed peers, namely, LPI Capital Bhd and Allianz Malaysia Bhd as well as strong growth in takaful contributions,” the research house added.
