Shariah compliance

MNRB’s sustainability journey has just about commenced and there is still much room for further enhancement to processes and disclosures. Nevertheless, it is fair to say that in aligning its objectives with Maqasid al-Shariah, ESG compliance is already embedded into the Group’s culture. HOLD and TP of MYR1.04 maintained.

Just getting off the ground

MNRB’s ESG adoption is at an infancy stage, with much room to progress. In FY22, the group commenced the integration of sustainability initiatives into its corporate and business operation activities and the focus had then been on Principle 1 (of four Principles) of the UN Environment Programme Finance Initiative Principles of Sustainable Insurance (UNEP PSI), i.e. embedding its decision-making environmental, social and governance issues within its insurance business.

Room for improvement in disclosures

MNRB’s current ESG score of 29 (out of 100) based on our proprietary scoring methodology (see pg.3) is below average (50). At this stage, there is a lack of disclosure, particularly around Scope 1-3 greenhouse gas emissions on the environment front, and various other social parameters. Sustainability targets need to be spelt out in greater detail, but we take comfort in the group’s adoption of Shariah principles in its overall operations, which naturally leads to ESG compliance.

Forecasts and target price maintained

Our earnings forecasts are maintained – investment income is a volatile component. Our Gordon Growth Model (GGM)-derived target price (TP) of MYR1.04 is also maintained, and it assumes the following parameters: COE: 9.4%, ROE: 5% and LT growth: 3%.

Source: Maybank Research - 17 May 2023