Raising forecasts

Investment income continued to surprise positively, alongside lower claims. Our forecasts are raised by 56%/18%/20% respectively for FY24- FY26E (largely to factor in higher investment income assumptions) and we maintain our BUY call. Our Gordon Growth Model (GGM)-derived TP is raised to MYR1.70 from MYR1.40 on rolling forward valuations to FY25 from CY24 (COE: 10.6%, ROE: 6.8%, LT growth: 3.5%).

Above expectations

MNRB’s 3QFY24 net profit of MYR85m (+47% YoY, +104% QoQ) took 9MFY24 net profit to MYR196m (+310% YoY) – above our previous full-year forecast of MYR155m. Positively, the reinsurance business benefited from lower claims, given the large flood claims in the previous year, while the general takaful business continued to see robust motor premium growth. That MNRB’s 3QFY24 earnings were a strong beat may also be attributable to mainly to strong investment returns (+203% QoQ) - 9MFY24 investment return more than doubled YoY.

Strong performance from reinsurance

The reinsurance business turned in a net profit of MYR150m for 9MFY24 versus MYR29m for 9MFY23. The much-improved performance was due to lower claims, given than 9MFY23 results were impacted by the Great Malaysian Flood. The better results were also due to higher investment income.

Commendable performance from General Takaful

The general takaful business saw its revenue jump 33% YoY in 9MFY24 due to robust motor premiums and higher agency sales. Its net profit surged as a result of the higher revenue as well as better investment income and wakalah fees. The family takaful business saw its revenue decline YoY due to lower revenue from its bancatakaful and agency channels, but net profit held up due to higher investment income.

Source: Maybank Research - 8 Feb 2024