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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.
  TianChoi1 Do u all read the announcements in KLSE screener??? KWSP is selling maybank, petronas chemical etc too. This means they are just doing portfolio restructuring. Anyway I am investing in this counter. Sui Sui foundamentals . 15/11/2021 5:31 PM CakapSohaiThings 33% Cukai Makmur one off, no problem. 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 value_invest Lets discuss some concerns on FRS 17:- FRS17 full details is not released by BNM. There is no CASH flow impact on the company, there maybe some accounting profit if there is any. To my understanding, there will be minimum impact on the takaful, most of the insurance company has been preparing for the FRS17 years back instructed by regulatory body. The impact on Takaful will be less less impact than expected, as Takaful is sitting on RM 1.2bil insurance reserve surplus which can be utilized.. Market is dynamic, there are so many players and opinions... No wrong or right.. Happy Investing... 15/11/2021 7:23 PM MM78 Talking about P/B ratio, Takaful is at its 5 years low of 2.08 compares to its 5 years high of 4.68 , so what is the fear of MRS 17 reduces its book value ? This is another good time to buy a fundamentally strong shares of ROE mid to high 20s for the last 5 years. Takaful is a market leader in Islamic insurance in Malaysia. Potential is huge. The company would not collapse because its good CEO is leaving. 16/11/2021 9:08 AM  wsb_investor The 1.2bil surplus cant be touched and will just stay there forever, or to offset future losses. It will donate to charity once STMB closed down. In any circumstances, that 1.2bil will never ever belong to shareholders. There is no cash flow impact, yes, and impact to takaful is small. The key impact on STMB is because the heavy focus on single premium policies. Reduce profit by 16%? That is so optimistic. IFRS17 requires spread of profit to entire policy term. Typically MRTA is like 30+ years, considering the reducing balance, profit allocated to Y1, at best should only be around 15%. Assume 80/20 split on day1 gain/recurring profit, the reduction in profit should be at the range of 65%+. 17/11/2021 5:05 PM shareprofit dun tink EPF can be wrong la..slowly selling sure got reason mabe ultimate reason is to conserve cash for ultimate crash boom recession worldwide 17/11/2021 7:03 PM wsb_investor EPF can be wrong as well, ultimately people making the call behind can be as young as just a fresh graduate. Even top analyst will not understand IFRS17 as well, and to be honest even among actuarial people, majority only have understanding of IFRS17 at preliminary level. 17/11/2021 10:35 PM zzprozaz wsb_investor, where to see Takaful got how much 30years contract? Where you get the data? 18/11/2021 5:01 PM wsb_investor is mrta, people typically buy full term. house loan typically 25-35 years, convert to average about 30y 18/11/2021 6:04 PM NYC 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%. 19/11/2021 8:28 AM wsb_investor 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. 19/11/2021 8:55 AM value_invest 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.... 19/11/2021 2:40 PM davidkkw79 What about the profit & loss accounting part ? Will be significant less 50% ? 19/11/2021 3:09 PM value_invest 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. 19/11/2021 3:35 PM NYC 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. 19/11/2021 3:55 PM wsb_investor 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. 19/11/2021 4:42 PM apple168 EPF is near 99% right on her investment strategy! Guys, please watch out! EPF has been dumping Takaful like no tomorrow! 20/11/2021 7:48 AM Investeye Will this benefit Takaful.. https://www.utusan.com.my/terkini/2021/11/kwsp-lancarkan-i-sayang-i-lindung/ 23/11/2021 3:14 PM davidkkw79 Holland ! https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3211610 23/11/2021 6:01 PM danielong1982 i think still not too bad as MCO for months. my own insurance business also not moving as not going out as well. 23/11/2021 6:35 PM okdoke @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 23/11/2021 8:12 PM danielong1982 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. 23/11/2021 8:39 PM apple168 Very bad quarter result! EPF predicted correctly! No wonder EPF dumping massively! 24/11/2021 7:47 AM observatory 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. 24/11/2021 3:40 PM wsb_investor 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. 24/11/2021 4:44 PM wsb_investor 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. 24/11/2021 4:52 PM CakapSohaiThings 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 24/11/2021 5:01 PM wsb_investor Takaful owns life and general business (90% profit from life), MNRB owns reinsurance (mainly general) + Takaful Ikhlas (50/50 life/general). 24/11/2021 5:26 PM Bao2lai 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 24/11/2021 11:15 PM wsb_investor 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. 25/11/2021 9:27 AM davidkkw79 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. 25/11/2021 9:34 AM Bao2lai 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. 25/11/2021 11:41 AM value_invest @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! 25/11/2021 8:21 PM stevenckheng so in the market we see many insurer and bank offering takaful insurance, those are reinsurance from 'SYARIKAT TAKAFUL MALAYSIA BHD'? 25/11/2021 11:24 PM Zackmeiser 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. 26/11/2021 3:38 PM DickyMe "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? 28/11/2021 12:32 AM  | |
