BUY maintained

MNRB’s 2QFY25 results were within expectations and 1HFY25 net profit growth of 66% YoY was driven predominantly by stronger contributions from the reinsurance division. We maintain our forecasts and our BUY call, with an unchanged TP of MYR2.70. This pegs its CY25E earnings to its updated long-term forward rolling PER mean of 5.5x.

Net profit doubled YoY in 2QFY25

MNRB’s 2QFY25 net profit of MYR92.7m (+123% YoY, -60% QoQ) took 1HFY25 net profit to MYR184.9m (+66% YoY) – within expectations at 49% of our full-year forecast. Group net profit in 2QFY25 more than doubled YoY due to an improved claims experience, accretion of interest rates and forex movements as well as higher associate contributions, offset by unrealized forex losses on foreign assets.

Reinsurance the key earnings driver

The reinsurance division saw its pretax profit surge 150% YoY and accounted for 64% of group pretax profit in 2QFY25. This was driven by an improved claims experience and higher investment income during the period.

Lower earnings from general and family takaful

The general takaful division was the second largest contributor (22%) to group pretax profit in 2QFY25, but its pretax profit declined 9% YoY due to higher acquisition costs, despite an 18% YoY increase in revenue, driven by higher revenue from motor and fire insurance. The family takaful division contributed to just 2%, as its pretax contribution in 2QFY25 dropped 61% YoY. This was attributed mainly to higher management expenses, despite higher takaful revenue.

Source: Maybank Research - 25 Oct 2024