INVESTMENT HIGHLIGHTS

• Strong position in the insurance and takaful segment

• Growing faster than industry

• The insurance and takaful segment will continue to be a meaningful contributor to the Group

• No revision to FY18 and FY19 forecast

• Maintain BUY with unchanged TP of RM11.40, based on PB multiple of 1.6x

A look at Etiqa. The Group held an investor day recently to present on its insurance and takaful subsidiary. Below were our key take away from the meeting:

• It is the no. 1 in Malaysia in combined general insurance & takaful, in general takaful, in bancassurance/bancatakaful and in online insurance & takaful.

• It is growing faster than the industry.

• Focusing to grow in ASEAN countries.

Strong position in Malaysia. Etiqa Insurance & Takaful is the leader in the general insurance & takaful segment. For the 12-month period until March CY18, it held an 11.5% market share in this segment (source: LIAM/ISM Statistics. Meanwhile, it had a 10.5% market share in the new business for life/family, making it no. 4 in this segment. Overall, we believe that it is closing the gap with its 3 biggest competitor and gaining more market share.

Growing faster than the industry. One of the reasons for this is that Etiqa have been consistently growing faster than industry. For example, on a rolling 12-month period until 1QFY18 and 2QFY18, its regular premium/contribution for life & family business grew +38.0%yoy to RM446m and +46.2%yoy to RM475m respectively vs. industry’s growth of +1.5%yoy and +1.1%yoy respectively. As for Etiqa’s general business, the net written premium/contribution for the 12-month rolling period up to 1QFY18 and 2QFY18 grew a consistent +3.0%yoy respectively vs. to the industry’s -0.9%yoy and 0.6%yoy respectively.

Strong presence. We believe that the robust growth was partly contributed by its strong agency force. It has more than 8,000 agents with 27 branches or sales service centres. This wide distribution network allows for better client coverage. Also, it is the no. 1 online insurance and takaful operator in Malaysia.

Source: MIDF Research - 9 Nov 2018