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Wednesday, April 25, 2018

Takaful: Strong Earnings Continued


Results Update

For QE31/3/2018, Takaful's net profit rose 24% q-o-q or 23y-o-y to RM70 million while revenue was mixed- rose 44% q-o-q or 13% y-o-y to RM746 million. Revenue rose y-o-y due to to higher revenue generated by both Family Takaful and General Takaful business. Profit before zakat and taxation rose y-o-y due to higher net Wakalah fee income. Family Takaful business generated higher gross earned contributions of RM324.0 million due higher sales from mortgage and credit-related products. General Takaful business generated higher gross earned contributions of RM182.4 million mainly from fire and motor classes.


Table: Takaful's last 8 quarters' results


Graph: Takaful's last 47 quarters' results

Valuation

Takaful (at RM3.39 as at 3.30pm) is now trading at a PE of 12.7 times (based on the last 4 quarters' EPS of 26.7 sen). At this PER, Takaful is deemed very attractive.

Technical Outlook

Takaful has broken below its long-term uptrend line, SS at RM3.80. 


Chart 1: Takaful's monthly chart as at Apr 25, 2018_10.00am (Source: Shareinvestor.com)

Takaful is now moving in an intermediate downtrend line, RR with resistance at RM3.50. If it can break above the RM3.50, it may begin its next upleg.


Chart 2: Takaful's weekly chart as at Oct 20, 2017 (Source: Shareinvestor.com)

Conclusion

Based on satisfactory financial performance & attarcive valuation, Takaful is a good stock for long-term investment. However we will have to wait for the technical outlook to turn positive before taking any aggressive position on this stock.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision


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