Following the better-than-expected 3QFY23 results, we raise our FY23 net profit forecast by 41% but maintain our FY24 and FY25 estimates. Correspondingly, our Gordon Growth Model (GGM)-derived TP is raised to MYR1.04 from MYR0.90 (COE: 9.4%, ROE: 5%, LT growth: 3%). We maintain a HOLD call on MNRB.
MNRB’s 3QFY23 net profit of MYR71m (+408% YoY) took 9MFY23 net profit to MYR72m (+14% YoY). The results were above expectations at 83% of our previous full-year forecast. The group benefited during the quarter from higher fair value gains, driven by lower bond yields. This was offset in part by a higher-than-expected combined ratio of 105% in 9MFY23, versus our full-year expectation of 100%. Excluding the impact of the Great Malaysian Flood end-2021, the group’s 9MFY23 net profit would have been MYR88.6m versus MYR82.2m in 9MFY22 (+8% YoY).
The reinsurance division saw its gross written contributions (GWC) rise 13% YoY in 9MFY23. Coupled with a marginally lower combined ratio of 102.2% versus 102.4% in 9MFY22, its profit after tax (PAT) jumped 95% YoY. The Family Takaful division saw its 9MFY23 GWC rise 9% YoY but with lower investment income (-25% YoY), PAT slipped 11% YoY. The General Takaful division saw its GWC jump 33% YoY and while its claims ratio was a higher 56.5% in 9MFY23 versus 48.6% in 9MFY22, and investment income declined 15% YoY, its PAT eked out a respectable 28% YoY growth in 9MFY23.
We raise our FY23 net profit forecast by 41% on the back of higher topline growth at the reinsurance division, as well as higher investment income. We maintain our FY24 & FY25 forecasts for now, with investment income being the volatile component. We expect MFRS17 to negatively impact the FY24 earnings at the Family Takaful division.
Source: Maybank Research - 8 Feb 2023
Chart | Stock Name | Last | Change | Volume |
---|
Created by kltrader | Jan 24, 2024