Syarikat Takaful Malaysia Bhd ('Takaful') is involved in the provision of Islamic insurance products & services. It operates mainly in Malaysia, with a small presnece in Indonesia. Its Indonesian operation accounts for only 13% of its turnover.
Recent Financial Results
Takaful's financial performance is profitable, but fairly erratic. For 3Q2008 ending 31/3/2008 it reported a net profit of RM7.1 million of a turnover of RM281 million. This compared favorably to a net loss of RM3.6 million incurred in QE31/12/2007 on a turnover of RM200 million. The loss was attributable to a write-off of a loan granted to a subsidiary, ASEAN Retakaful International (L) Ltd of RM10 million.
Valuation
Based on yesterday's price of RM1.70, Takaful is now trading at a PE of 11.8 times (based on last 4 quarters' EPS totaling 14.7 sen (including the above-mentioned RM10 million write-off) or 8.1 times (if the write-off is excluded). Its P/Book is about 0.9 times (based on NTA per share of RM1.95 as at 31/3/2008). At these multiples, Takaful is fairly attractive.
The true value of Takaful is its takaful licence. These licences are valuable in Malaysia, as Bank Negara has issued only eight licences to takaful operators. As per a recent article in the Edgedaily (go here):
As of end-June 2007, the total assets of the takaful industry were worth RM7.6 billion, representing 6.3% of the asset size of the larger insurance industry in the country. It is learnt that the central bank has no intentions to grant new takaful licences to insurance operators for the moment, which in turn would enable those that have these licences to capture a large market share in the industry. With no new takaful licences in sight, insurance operators who are keen on establishing takaful operations would have to either acquire stakes from operators that have these licences or merge their operations. However, it is not easy to find an insurance operator who is willing to share its takaful businesses with other players in the industry, given the bright prospects and lucrative returns that takaful services are capable of providing.
Technical Outlook
Based on the weekly chart below, we can see that Takaful had just surpassed its strong RM1.70 resistance yesterday. Today, it has even surpassed its March 2007 high of RM1.80. While the volume is still relatively thin, I believe that this could be a genuine breakout & the stock could soon test the RM2.00 level. If the RM2.00 level were taken out, then the stock could shoot for the RM2.40 level. [As at the close of the morning session, Takaful was trading at RM1.84.]
Chart 1: Takaful's weekly chart as at June 9th (source: Quickcharts)
Chart 2: Takaful's monthly chart as at June 9th (source: Quickcharts)
Conclusion
Based on cheap valuation & possible technical breakout, Takaful could be a good stock to short to medium-term investment.
4 comments:
It is worth to buy BIMB. Since BIMB hold 67% stakes of TAKAFUL.
Hi. Can u look at DAYA(0091)? Since technically also very bullish.
Hi commbull,
BIMB, being the parent of Takaful, should benefit from the latter's price run-up. BIMB (closed at RM1.16 yesterday) is recovering very well from its Labuan loan problems. Looking at its last 4 quarters' perfomance, BIMB's full year EPS is about 15-16 sen (excluding exceptional items). As such, it's trading at a PE of about 7 times, or P/Book of about 0.9 times (with NTA per share of RM1.29 as at 31/3/2008).
Technically speaking, BIMB share price is in a downtrend, with breakout at RM1.18-20. As at 10.00 am, BIMB share price has gained 10 sen to RM1.26, on volume of 9700 lots. So, we may be looking at a breakout here.
On Daya, the stock's price chart appears to be positive. I would look into its financial at a later date.
Hi Alex. Please monitor HOHUP. I think another uptrend wave is come le.
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