For QE31/13/2015, Takaful's net profit increased by 55% q-o-q or 34% y-o-y to RM46 million while revenue rose by 40% q-o-q or 30% y-o-y to RM562 million. Revenue increased 40% y-o-y mainly attributable to higher sales generated by both Family Takaful and General Takaful business as well as higher net investment income. Profit before zakat and taxation increased by 39.1% y-o-y due to higher wakalah fee income and lower expense reserves.
Table: Takaful's last 8 quarters' results
From the Chart 1 below, we can see that the revenue is on the uptrend. Profit margin took a dip in the last 2 quarters. Despite the erosion in profit margin, profit soared last quarter due to the surge in revenue.
Chart 1: Takaful's last 36 quarters' results
Valuation
Takaful closed at RM15.45 yesterday. After adjusting a 1-to-5 share split, the revised closing share price would be RM3.09. This means that Takaful is now trading at a PE of 16.6 times (based on the last 4 quarters' EPS of 18.6 sen). At this PE multiple, Takaful is deemed fully valued.
Technical Outlook
The stock has been in an uptrend. On weakness, it may pullback to find support at the horizontal line RM2.75.
Chart 2: Takaful's monthly chart as at May 25, 2015 (Source: BTX)
Conclusion
Based on improved financial performance & bullish technical outlook, Takaful is still a good stock for long-term investment. However, its upside potential is limited as the valuation is fairly demanding.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Takaful.
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