MORNING CALL:20/9/23

Kenanga sees reassurance in Syarikat Takaful’s resilience

Transcript

00:00 This midweek, we take a look at Syarikat Takaful where Kenanga Research is keeping its outperformed

00:05 call after a briefing it had with the company that gave it a better sense of its operations.

00:10 It has a RM4.10 target price which implies a possible 14% upside.

00:15 In the first half of FY23, Takaful saw an 18% year-on-year increase in Takaful revenue.

00:21 From the family Takaful end, credit-related products remain as the lion's share, accounting

00:25 for about 80% of its portfolio.

00:28 On the flip side, Kenanga actually gathered that general Takaful mostly gained thanks

00:32 to a growing motor exposure.

00:34 Contractual service margin or CSM replenishment seems to be intact.

00:39 Under the new MFRS17 standards, Kenanga notes that the group had reported a CSM book of

00:44 $1.25 billion which would be recognised across the tenure of its written policies.

00:49 In the first half of FY22, Takaful reported deep losses in investment fair value which

00:55 undermine all its overall returns.

00:57 Meanwhile, first half FY23, net investment income doubled to $250.1.9 million thanks

01:04 to better trading sentiment which uplifted equities and fixed income asset performances

01:09 which Kenanga believes could sustain it through FY23.

01:13 Kenanga believes Takaful's sole office, a distinctive opportunity as a return of trading

01:17 sentiment could translate into demand for sharia alternatives.

01:21 According to Bloomberg, there are seven buys and one so-ho from Afin Hwang IB on Takaful

01:26 according to the latest data.

01:28 This works out to an average target price of RM4.31 which is 72 cent more than its last

01:33 close.

01:33 [music]