Bank Negara’s new curbs on househould  debt  may  slightly  impact  on the  growth  of  Syarikat  Takaful  Malaysia  (STMB)’s  family  takaful segment. The group’s bancatakaful partnerships with several  Islamic banks  have historically boosted its mortgage reducing  term takaful (MRTT) and group credit wakalah products. Our forecast remains intact as our topline growth of 15% is already much more  conservative than the Management’s guidance. Maintain BUY.  

- Family takaful segment may moderate. We expect some moderation in the company’s main product segments of family takaful fund, namely the MRTT  (individual  plan  coverage  for  mortgages)  and  credit  wakalah (group  plan  coverage  for  personal  credit  facilities).  Both  products comprise a relatively large portion of the family takaful portfolio. However, we do not expect major changes to the company’s existing guidance for 20%-25% topline growth, in line with the industry average, since:-

    - All applications for loans and credit facilities prior to 8 July 2013  will not be subject to Bank Negara (BNM)’s new ruling. 

    - If  customers  purchase  or  refinance  a  new  loan,  they  may  need  to apply  for  new  MRTT/  credit  wakalah  coverage,  which are  based  on single contributions or one-time lump sum payment. 

    - Coverage provided for credit wakalah is usually meant for short-term credit of less than 5 years.

- Already  conservative  forecasts.  Our  forecasts  of  15%  topline  and bottomline  growth  are  already  way  more  conservative  than Management’s guidance for  20%-25%  growth,  which  is  in  line  with  the industry’s growth expectations.  

- Extra 5% NCR showing results. STMB said its general takaful segment is showing promising growth as the direct contributions from its branches had increased recently. We believe this is due to consumer response to the  additional  5%  No-Claim  Rebate  (NCR)  (on  top  of  the  existing  15%) for non-motor general takaful certificates maturing this year.  

- Maintain BUY. We make no changes to our forecast and MYR9.70 FV.

Source: RHB