PETALING JAYA: After posting a commendable performance in the first half of financial year 2023 (1H23), Syarikat Takaful Malaysia Keluarga Bhd
is expected to chart a weaker 2H23.
CGS-CIMB Research said it expected the takaful operator to register a weaker net profit in 2H23 due to lower net investment income (NII).
“Although Takaful Malaysia’s 1H23 net profit of RM185.5mil accounted for 53% of our full-year forecast and 55% of Bloomberg consensus’ estimates, we regard the results in line as we expect a weaker 2H23.
“This is because we believe the high NII in 1H23, which was doubled year-on-year (y-o-y), would not be sustainable in 2H23,” it said in a report.
CGS-CIMB Research said 1H23 net profit grew by a solid 29.9% y-o-y, driven by a 17.9% y-o-y rise in takaful revenue, a doubling y-o-y in NII and the absence of the prosperity tax.
“We project a net profit of RM163.6mil in 2H23, representing an 11.8% decline from 1H23,” it added.
The research house is maintaining its “add” call on Takaful Malaysia with a target price of RM3.96 a share.
This is premised on the potential re-rating catalysts on robust expansion in takaful revenue and the brokerage’s strong projected earnings per share growth of 8.5% in FY23 and 11.6% in FY24.
The potential downside risks to its call include weaker-than-expected growth in takaful revenue and a spike in management expenses, which would lower net profit.
