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Overview
Financial Highlight
HeadlinesBusiness Background Syarikat Takaful Malaysia Bhd is a takaful insurance provider in Malaysia and Indonesia. Like insurance, takaful protects participants from loss, but unlike traditional insurance, it adheres to a business model that conforms to Islamic religious law. The company’s business includes participants who pool their money into a Participant Risk Fund, which then has funds available to disburse when a participant is facing a loss. For managing the takaful fund, the company receives a service fee on participant contributions. Syarikat Takaful Malaysia primarily manages family and general takaful businesses, which include medical, motor, and home takaful. The vast majority of the company’s revenue comes from customers in Malaysia.
  freedomfund Guys, take note that insiders ie senior management esp CEO Hassan Kamil has been selling aggressively since late Feb2021. See Bursa notifications! This is similar to AMMB where senior management also selling aggressive a few weeks before the big fine. 08/03/2021 3:42 PM freedomfund Takaful Msia at 5.00 is priced at 2.75 book value. Usually banks and insurance companies' prices are around 1x book value. This is way too high. Life insurers book value is more whereas general insurers are less as general insurance businesses are rather matured compared to life which is still in high growth stage. Takaful Msia business has more general biz. Therefore its value should be lesser. 08/03/2021 3:51 PM freedomfund This is only my 2sen thoughts since I worked in insurance industry for past 34 years... 08/03/2021 3:52 PM freedomfund CEO Hassan Kamil is a qualified Actuary. Obviously he knows what is overvalued or undervalued. 08/03/2021 4:02 PM gongkia that ceo owns 70 share last year, 70! then all the few hundred k shares sold are from the LTIP scheme. typical employee i would say. 08/03/2021 6:10 PM freedomfund Personally I worked for AIA for many years before retirement, bought LTIP at around HKD20 in 2012 (AIA shares are public listed in Hong Kong). Now 9 years later, AIA HK share price is now around HKD100 ; 5 baggers! I keep as the company was growing year to year. Whereas not sure what's happening in Takaful Msia. If it is good, like AIA, the CEO will keep. If he (and his other senior management members) keep selling, something is telling... 08/03/2021 7:52 PM Papayashot https://www.bursamalaysia.com/market_information/announcements/company... https://www.bursamalaysia.com/market_information/announcements/company... https://www.bursamalaysia.com/market_information/announcements/company... The above shows that the CEO keep on selling shares many years ago, although Takaful Malaysia is in its superbull era in 2016? By the way, I just show some of them as they are many many more... By the way, Takaful Malaysia focuses mainly on Family Takaful (~2 bil revenue), as compared to GI (~0.8 bil revenue).. Not the other way round @freedomfund 08/03/2021 8:50 PM gongkia takaful is one of the best return stock for the last 10yr in bursa (track record). ROE is much higher than peers. a rm10k invested in takaful will return rm275k (2010-2020) 08/03/2021 11:03 PM observatory Yes, Takaful Malaysia management has a long record of disposing their shares granted, which does not send a good signal to shareholders. @freedomfund, I believe Takaful Malaysia high PB ratio has to be compared against its high ROE at over 20% currently (used to be above 30% a few years ago). While Public Bank is priced at "only" PB 1.8X, its ROE is just above 10%. The ROE for banks has been declining for years given they need to hold more capital under Basel III. Since you’ve been in the insurance industry for many years, can I seek your opinion on how the competitiveness and profitability of life insurers in Malaysia, in particular Allianz Malaysia which is also listed. How does it compare against AIA and others? I read that AIA has done very well in recent years because mainland China clients sign up with AIA Hong Kong as a means to transfer wealth out of the mainland. The other stellar performer in HKEX is Ping An Insurance. Wonder if you have any view on them too? 08/03/2021 11:15 PM freedomfund @ Papayashot, yes u r right, more biz in life than general. My error. From latest report, it seems that life revenue has stagnanted. STM also paid a new "dowry" to RHB Islamic Bank for the renewal on bancassurance arrangement. Not sure how this amount is accounted for. Such fees can run into hundreds of millions RM and it can stunt profit growth. e.g. ING (now merged with AIA) once paid to PBB something like RM300m for the ING-PBB bancassurance partnership. At one time, I used to run a bancassurance team on the insurer side. Can you imagine the work pressure from the regional bosses to regain back the hundreds of millions investment within 5 to 10 years? 09/03/2021 9:56 PM freedomfund @observatory, most of my working years was in training and sales/marketing. I am not a figures guy but I try to explain a bit here in simple terms. Of course PB ratio also depends on ROE, top and bottom line growth rate, asset and management quality etc. STM should command a higher PB ratio but maybe not nearing 3x hence its management is constantly selling. The other way to measure is PE. For EPS of 43.75sen pa historical, RM5.00 trades at PE 11.4. Generally, for general insurers the PE is usually not high, maybe 8 to 10. (Other than LPI which has a very lucrative captive market in PBB loans fire insurance portfolio ie you take a PBB loan, you must take their fire insurance). For life insurers, 10 to 15. Assuming the STM life: general ratio is 5:2 (based on latest quarter result), the weighted average PE shall be : 5 x 13 (mid of 10 to 15) + 2 x 9 (mid of 8 to 10) / 7 = 11.8 which is very close to current traded PE. Hence, fully valued by PE valuation. If I am in STM senior management and I can see that life sales has stagnanted, then the PE for life side should be lower, say 10 only. Then current price is over-valued, hence I will sell. Other insurers? Allianz Life (ex-MBA) : high growth in life portfolio. Once life profit outgrows general, valuation will grows exponentially. But as @observatory said, beware of ICPS shares when counting PE. Accounting wise, they don't count ICPS but valuation wise, we need to count, just by assuming all ICPS are converted to normal shares. In reality, not many will convert as they get 20% more dividends and there is no expiry dates ie perpetual. But still, valuation wise, need to count them in. So do not let the current low PE shown mislead us. Manulife : life side, poor management quality and weak sales channels esp agency force. Agency force is aging (full of uncles and aunties). Sales hovering around 40-60m in new business premiums for many years. Hence, share price hovering around RM2++, not growing for decades. Just my 2 cents. Hope, read by younger investors. My little contribution to them... 09/03/2021 10:32 PM freedomfund @observatory, sorry forgot to mention AIA and Ping An in HK. AIA share price co-relates closely with their VONB - Value of New Business (the present value of all the future premiums payable by customers). VONB increases a lot during the earlier listing years due to real growth and tweaking (like fine tuning our car engines for peak performance) various variables that add up to VONB. Once tweaking is close to perfection (there is only that much that you can tweak your car engine), real growth in sales will be the main focus. AIA has good branding, added with high visibility being a component of HSI, and top talents in management driving all 15 or 16 countries, make it a high growth player. The regional management's job is to ensure annual top and bottom line grows say, min 15%pa. And the drive is very very focus. Of course, China now is a huge contributor among them with its gigantic middle income group. Ping An in China is also considered a well managed life insurer (this is relative, better quality compared to say, China Life - also listed in HKSE). Hence it carry good valuation in HK. The current Group CEO of AIA, Lee Yuan Siong was formerly from Ping An. 09/03/2021 10:50 PM freedomfund Sorry I was a bit long winded above. For those who invest based on gut feelings, no need to read la... 09/03/2021 10:52 PM Sanofi I am working in the bank and the gov is pushing very hard in Islamic financing since last quarter, almost 10 out of 8 applications are under Islamic, and takaful is compulsory to bundle during loan acceptance. This is the reason why I am buying into this company! :) 10/03/2021 1:13 AM Sanofi now almost all the local banks are selling islamic loans and what do you think for the next 2/ 3 quarters... 10/03/2021 1:16 AM Papayashot Hi Sanofi, what you think on the management team keep selling on Takaful shares? It is quite annoying to see this in fact... 10/03/2021 8:34 AM observatory @freedomfund, thanks for your valuable inputs. I've learned a lot from you! Considering the business fundamentals, management quality and valuations of the different insurers listed in different markets, which insurance stocks would you accumulate, besides the AIA stock you already own in HKEX? Do you feel that insurance stocks are under/ over/ fairly valued as compared to the general market or financial sector stocks? 10/03/2021 11:49 AM freedomfund @observatory, don't mention it. I think you are much more experienced in investment. Since you ask and also for the benefits of young investors : Financial counters like banks and insurers/takaful operators are usually traded more efficiently ie close to their fair value as these companies are highly regulated and supervised by BNM hence more institutional and more informed individual investors in them. Some are traded at the higher end of the spectrum like Public Bank or LPI because of high quality management and assets. At the other end of the spectrum will be the likes of Affin etc. Then which stock is good to invest for long term? (Short term trade will have a different strategy). Growth companies. How to identify them? Look at their KPI results like Life/Family takaful : new business growth, persistencies, quality of distribution channels... General/Takaful am : new biz growth, claims ratio, distribution channels... Current outlook in some listed Bursa insurers (my own opinion only): ALLIANZ - good quality management, steady and sustainable top line growth. Once life revenue is more significant than general side, valuation will increase faster. At current price, it is fairly valued. This counter has a lot of long term holders, hence low liquidity. I attended their agency sales gathering before, thousands of agents there, the energy level is super charged. True enough, their top line numbers grew year after year. Fairly valued, but can accumulate long term hold. MANULIFE - management expense is high, agency size stagnant, bancassurance with Alliance Bank costly and not much growth. For trading ok, I will not buy this counter for long term hold. MNRB - management quality is a big question mark. Plenty of operational issues. Hence, share price is deeply undervalued by normal measurements such as BV or PE. The retakaful portfolio usually carries a lower PE valuation due to volatile earnings. If management overall KPIs are improved (such as life good persistencies), the share price will fly. If a new aggressive CEO is appointed to drive real changes, I will focus on this counter. Takaful family market - yes, it is true that at around 14-15% penetration rate, it is still a virgin market. The last time I attended the MTA (Msian Takaful Assoc) annual dinner, the BNM governer talked about increase in penetration rate from 14% to 14.2% after one year (lebih kurang figures). Cannot be so small after all we have 11 family takaful operators. Then I realised the penetration rate formula is based on number of inforce certificates/total population. Note the word "inforce". Meaning, sell 1m certificates but if lapsed certificates are 700K, then the net inforce gain is only 300K. No wonder penetration rate grow so slowly and lapses affect profitability. Therefore to see if a takaful operator is doing well or not, quality of business needs to be known. Unfortunately, quality business in our Muslim market is still very far behind the conventional life insurance. In short, For growing good quality insurers esp life - buy and hold long term. For poor quality insurers esp with more exposure to general - avoid or trade only. Again, my 2cents... 10/03/2021 2:47 PM Papayashot Hi freedomfund, yes, it is rather annoying to see Top Management keep dumping the shares once they have LTIP shares in their hands. My concern is: They start dumping their LTIP shares since 2015-2016, and during that time, STMB profit is way lower than the current level. So, are you saying that their Top Management is not so confident on the company performance since 2015, even STMB shows consistent profit growth year after year since 2015 till now? 10/03/2021 3:17 PM kinuxian @freedomfund Thx for sharing and widen our view especially ppl like us not within the circle. How about LPI? 10/03/2021 3:44 PM observatory @freedomfund, thank you for taking the time to share your thoughts. Your inputs have given me a fresh and useful perspective when I read those company reports. I've truly benefited! 10/03/2021 4:15 PM gongkia there are 2 call warrant exercise value at 4.8-5 expire at this month, so not easy to go up :) 10/03/2021 5:32 PM hazli KUALA LUMPUR (March 11): A majority of life insurance companies in the country are extending financial assistance to their policyholders who may develop side effects or complications resulting in hospitalisation from Covid-19 vaccinations. Life Insurance Association of Malaysia (LIAM) said the coverage includes hospitalisations costs that were medically necessary and reasonable due to side effects from COVID-19 vaccination under the National Covid-19 Immunisation Programme. A number of life insurance companies are also offering cash relief programme for side effects under their respective Covid-19 vaccine fund or medical assistance programme,” it said in a statement today. It said the assistance includes reimbursement of medical bills for Covid-19 patients and post Covid-19 vaccination support for hospitalisation due to vaccine side effects; medical assistance and special death benefits; hospitalisation income; and cash relief. Chief executive officer Mark O’Dell advised policyholders to contact their insurance company to find out more about the assistance offered in the event that they may develop side effects due to the Covid-19 vaccine. While applauding the government’s proactive efforts to protect the rakyat, he also urged Malaysians to play their part in the COVID-19 battle by registering for the immunisation programme via the MySejahtera application. 12/03/2021 1:01 PM okang If physical AGM is to be held In April/May, look forward to see like minded share owners to attend and touch base. 17/03/2021 11:15 PM Papayashot any ideas on the effect of IFRS17 on Takaful income reporting? I wonder whether how severe is the impact.. 18/03/2021 9:46 PM limyuwei STM CEO talked in a webinar this morning. https://www.linkedin.com/in/hassan-scott-odierno/recent-activity/ 30/03/2021 12:17 AM limyuwei https://www.theedgemarkets.com/article/aminvestment-bank-research-starts-coverage-takaful-fv-rm620 31/03/2021 11:51 PM Papayashot how come the 6th LTIP price is only RM 3.55/share?? How to calculate the price wor? Last time I believe is around RM 4.16/LTIP share le.. 02/04/2021 11:25 PM fortheemprah IFRS17 ... last time, if you close RM1billion in a quarter, you can report the revenue as RM1billion. After IFRS17, you have to pro rate it across the number of years of validity, i.e. RM1billion coverage for 20 years means RM12.5 million per quarter only. Anyone can verify the above understanding? If the above is truly the case, then you can see EPS per quarter is gonna be nosedive from the moon. 13/04/2021 10:19 AM limyuwei Yes you are right, revenue is not important anyways, it is more for the profit. It will not be a simple divide by 20 years also, the earlier years will have higher weightage. 13/04/2021 1:22 PM limyuwei Got pro and cons, but in the earlier years, yes, EPS gonna be a nosedive. 13/04/2021 1:23 PM Xcalibre If EPS is going to nosedive then does that mean share price is going to nosedive too? 13/04/2021 3:22 PM Papayashot Perhaps market already factor in the IFRS17 effect at the current price. 13/04/2021 3:41 PM  | |
