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2,787 comment(s). Last comment by Kadir at Dec 1, 2021 11:33 AM
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NYC
9 posts

Posted by NYC > Nov 19, 2021 8:28 AM | Report Abuse

It depends on the type of insurance policy. Takaful don't just sell MRTA, they have comprehensive range eg. general, PA, medical & life. 70% of revenue contributed by Family segment. Don't have further stats breakdown of each policy. However, as per latest report from UOB KayHian, management had guided the impact to be roughly 15%.


wsb_investor
73 posts

Posted by wsb_investor > Nov 19, 2021 8:55 AM | Report Abuse

General business only ~10% of total profit. For life business, in 1H21, credit related contributions (MRTT including LPPSA MRTT and personal financing) made up a significant 75.2% of the total gross contributions for the group’s family takaful business.


value_invest
1136 posts

Posted by value_invest > Nov 19, 2021 2:40 PM | Report Abuse

For FRS17, the impact will be less than expected, First, the book will be applied retrospectively and the restatement of comparative financial amount. Then, there will be a day 1 downward adjustment to retained profit for accounting modification on old single contribution policies, thus impacting the opening balance of STMK’s shareholders’ funds, reversing out the Unearned profits from its retained earnings. In future,this amount of unearned profit will be recognised over the remaining policy contracts which will offset new policy's lower earning regnisation.
In summary:-
The shareholders' funds will be lower,
ROE will be higher, there will be old policy profits recognised adding to the profits, new policy's income recognised will be lower, CASH flow still the same, Business still the same. Bear in mind that the company also derive their profit from the investment income with the no change in CASH flow.

In any case, the change in accounting standard does not alter the business nature and cash flow of single contribution products.

At the moment, authority has yet to issue the finalized guidelines. Changes may still occur between now and the implementation date....


davidkkw79
4948 posts

Posted by davidkkw79 > Nov 19, 2021 3:09 PM | Report Abuse

What about the profit & loss accounting part ? Will be significant less 50% ?


value_invest
1136 posts

Posted by value_invest > Nov 19, 2021 3:35 PM | Report Abuse

Don't think so, it will be minimum if there is any based on my analysis and cross check... FRS17 change of accounting is not a main concerns to me for investment. The main factors is the business nature. Will the change in accounting policy alter the nature of business? NO!!!

The fall in price lately is not due to FRS 17, it can be due to BIMB's restructuring and portfolio rebalancing which is very common.

The FRS 17 is an industry's issue, which will see all insurance stocks' price in KLSE dropping if there is concerns, but this is not the case.


NYC
9 posts

Posted by NYC > Nov 19, 2021 3:55 PM | Report Abuse

Yes, the impact only at accounting level, not the business. And no impact on cashflow.

From the 2-3 analysts reports plus the stated management guidance, impact would be in the range of 15-20% at recognized earning.


wsb_investor
73 posts

Posted by wsb_investor > Nov 19, 2021 4:42 PM | Report Abuse

IFRS17/MFRS17 is finalized, there will be some details up for debates but the overall impacts will not change much. Yes, cashflow the same, business the same, EV the same. If people value STMB with EV, then valuation will not change. But too bad, no one value STMB with EV, not even sure if STMB calculate EV on their end. As long as local analysts still using traditional P/B or PE to value STMB, IFRS17 will definitely impact the valuation.


apple168
5104 posts

Posted by apple168 > Nov 20, 2021 7:48 AM | Report Abuse

EPF is near 99% right on her investment strategy! Guys, please watch out! EPF has been dumping Takaful like no tomorrow!


RainT
8405 posts

Posted by RainT > Nov 22, 2021 12:11 AM | Report Abuse

Read


Investeye
2335 posts

Posted by Investeye > Nov 23, 2021 3:14 PM | Report Abuse

Will this benefit Takaful..
https://www.utusan.com.my/terkini/2021/11/kwsp-lancarkan-i-sayang-i-lindung/


davidkkw79
4948 posts

Posted by davidkkw79 > Nov 23, 2021 6:01 PM | Report Abuse

Holland !
https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3211610


danielong1982
59 posts

Posted by danielong1982 > Nov 23, 2021 6:35 PM | Report Abuse

i think still not too bad as MCO for months. my own insurance business also not moving as not going out as well.


newtrader1989
792 posts

Posted by newtrader1989 > Nov 23, 2021 7:13 PM | Report Abuse

Within expectations


okdoke
248 posts

Posted by okdoke > Nov 23, 2021 8:12 PM | Report Abuse

@danielong1982.....how was your insurance business for Oct till today.? Marked improvement? What do think of Stmb business for Oct till today? Thanks in advance


danielong1982
59 posts

Posted by danielong1982 > Nov 23, 2021 8:39 PM | Report Abuse

business a bit slow during MCO, as i did not really go out and interact with customer. I'm with AIA so i can actually submit everything online with customer remote sign. However some customers still don't like the idea of remote sign. I believe insurance market will make a come back to pre-pandemic level.


apple168
5104 posts

Posted by apple168 > Nov 24, 2021 7:47 AM | Report Abuse

Very bad quarter result! EPF predicted correctly! No wonder EPF dumping massively!


observatory
484 posts

Posted by observatory > Nov 24, 2021 3:40 PM | Report Abuse

Among the analyst reports I manage to get hold, only Affin and RHB mention MFRS17. They are also more conservative with their TPs.

Affin expects a contractual service margin impact of 30% (what does it mean to book value, profit etc?)

RHB expects 15% to 20% drop in FY23 earnings, and 25% to 30% drop in shareholder equity. As pointed out by @wsb_investor, many analysts use PB or even PE valuation. All else being equal, a 30% drop in equity should mean a 30% reduction in intrinsic value. Say previously the value is RM5, the new value should be RM3.5.

However as earning decline is more gradual, ROE = earning/ shareholder equity will increase by around 13% if apply RHB figures. So all else being equal, a higher PB value is warranted?

The biggest problem is they never explain how they derive their estimate. This is like a guessing game.


wsb_investor
73 posts

Posted by wsb_investor > Nov 24, 2021 4:44 PM | Report Abuse

No one will know the real impact unless you are the insiders in STMB. Not to mention the impact is up to management decision, they can set diff size of CSM where they deem fit (higher CSM = higher reduction in equity, in exchange for higher future profit). IFRS17 ultimately is just presentation, and will make insurance industry more comparable with other industry. STMB fundamental will not change, and will continue rely on MRTA. It is definitely way overpriced now due to recognition of large day1 profit, and its business will unavoidably fluctuate with MRTA sales, and indirectly home sales among bumis. With no more MOT next year, new home sales got limited prospect, and so is STMB profit.


wsb_investor
73 posts

Posted by wsb_investor > Nov 24, 2021 4:52 PM | Report Abuse

For Allianz and Maybank, even if close for new business immediately, no new policies sold, or no new loan/deposit, the existing business can still continue to generate reasonable profit (insurance margin/net interest margin) for up to 10+ years. This is not the case for STMB, where it has a very low recurring profit. Any analysts that try to compare STMB directly with Allianz or Banks are just too naïve.


CakapSohaiThings
478 posts

Posted by CakapSohaiThings > Nov 24, 2021 5:01 PM | Report Abuse

Future tense: Reduction in book value by ~29%, reduction of PAT and dividend by ~16%, change in CEO

FRS17 reduces the book value by 28.5%. To me, that's a serious issue. It instantly raises P/B ratio, which is the primary valuation for insurance companies. Also, PAT and dividend will be reduced by 16%. This is also an issue.

Change in CEO might also be an issue (although there's a possibility that the next CEO will do an even greater job).
15/11/2021 5:49 PM

Might be safer to enter after the implementation for the market to fully absorb the impact OR enter at a low price. IMO, current price is not low


stevenckheng
1191 posts

Posted by stevenckheng > Nov 24, 2021 5:15 PM | Report Abuse

what is the difference between Takaful and MNRB ?


wsb_investor
73 posts

Posted by wsb_investor > Nov 24, 2021 5:26 PM | Report Abuse

Takaful owns life and general business (90% profit from life), MNRB owns reinsurance (mainly general) + Takaful Ikhlas (50/50 life/general).


Bao2lai
27 posts

Posted by Bao2lai > Nov 24, 2021 11:15 PM | Report Abuse

In any case, changes in accounting standards will not change the business nature and cash flow of a single contribution product. What I care more about is whether demand and profitability can continue to grow. If not, even if the accounting standards remain unchanged, it cannot be a reason for potential investors to buy stocks


wsb_investor
73 posts

Posted by wsb_investor > Nov 25, 2021 9:27 AM | Report Abuse

You still don't understand the issue. Takaful currently enjoying a unfairly high valuation due to current flawed accounting standard, which allows it to recognize big profit upfront. In Q1 2023, when analysts or normal investors look at the first IFRS17 financial statement, the valuation will be downgraded immediately.


davidkkw79
4948 posts

Posted by davidkkw79 > Nov 25, 2021 9:34 AM | Report Abuse

yupe agree. According to current accounting way has exaggerated the profit of takaful, that's why malaysia insurance companies has been asked by international accounting standard organization to ammend it as soon as possible.


Bao2lai
27 posts

Posted by Bao2lai > Nov 25, 2021 11:41 AM | Report Abuse

potential impact of MFRS17 on the group’s earnings as it would have to amortise single premium policies over a longer period and lead to lower earnings which management had guided the impact to be roughly 15%.

From a share price valuation angle, the market should
accord the stock a higher P/B multiple from a higher ROE as there will be a day 1 downward adjustment to retained profit for accounting modification on legacy single premium policies.

As such, post MFRS17 ROE is anticipated to rise by 2-3ppts which will partially offset the earnings impact. There is also minimal risk to a cash call as its CAR ratio should remain well above 130% despite the one-off day 1 impact to retained earnings.


newtrader1989
792 posts

Posted by newtrader1989 > Nov 25, 2021 12:02 PM | Report Abuse

Fresh 52 week low on the way


fortunefire
651 posts

Posted by fortunefire > Nov 25, 2021 5:20 PM | Report Abuse

broken 3.6 and on the way to 3.3 in a month time.


danielong1982
59 posts

Posted by danielong1982 > Nov 25, 2021 8:00 PM | Report Abuse

time to top up. :)


value_invest
1136 posts

Posted by value_invest > Nov 25, 2021 8:21 PM | Report Abuse

@Bao@lai.. You quoted the UOB reserach regarding the FRS17 impact is quite clear and useful. Cross checking from the industry indicates the same things. UOB gives a conservative TP of RM4.80 is quite reasonable and conservative as compared to CIMB reserach's TP RM6.00, Kenanga TP RM5.85, HLG TP RM5.35, Ambank TP RM4.70. Anyhow, the market is so dynamic, there are different opinions due to different risk appetite, thus there are buyers and sellers at the current price.. Some may think the current price is over valued and is selling to buyers who think this price is attractive. There is no right or wrong in the investment decision. Make your own research and make your own investment decision. Happy investing!


stevenckheng
1191 posts

Posted by stevenckheng > Nov 25, 2021 11:24 PM | Report Abuse

so in the market we see many insurer and bank offering takaful insurance, those are reinsurance from 'SYARIKAT TAKAFUL MALAYSIA BHD'?


Zackmeiser
249 posts

Posted by Zackmeiser > Nov 26, 2021 3:38 PM | Report Abuse

Well if u plan to keep the counter for 10years and in 10years time more people will use insurance. Probably not a bad investment at this price. Not fancy growth like semiconductors but a safe one.


DickyMe
11010 posts

Posted by DickyMe > Nov 28, 2021 12:32 AM | Report Abuse

"Natural disasters and severe weather will occur frequently.

Prepare for stock market crash."
===========================================

YES! We are witnessing erratic weather.
Cold weather will be felt much colder than before.

Stock market crash has already begun.

Expect the dollar to rise more till middle of next year 2022.
Unprecedented inflation will be seen

Real estate will be hit hard.
Bitcoin is crashing and may find support around US$44500, however it is weak support. USD18500-18700 is a nice entry for a pullback.

Political front is still murky and the nation is in auto pilot.
Dimwitted politicians have gambled away the nation and pawned it's people.
Life will not be as easy as before even with BN or UMNO ruling.

There are no good leaders, only good racist pirates.
Malaysia is sliding and becoming pariah nation in South East Asia.

2021 is ending in a BEARISH MODE.

How is your year 2021 ending?


fortunefire
651 posts

Posted by fortunefire > Nov 29, 2021 10:43 AM | Report Abuse

it's so happening now. TP 3.50 isn't a dream.


CakapSohaiThings
478 posts

Posted by CakapSohaiThings > Nov 29, 2021 11:24 AM | Report Abuse

Next support 3.2


pirate99
821 posts

Posted by pirate99 > Nov 29, 2021 12:05 PM | Report Abuse

Ok wait 3.00


Kadir
2083 posts

Posted by Kadir > Dec 1, 2021 11:33 AM | Report Abuse

Charge fwd to 4

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