Takaful: Earnings Growth Continued

Results Update

For QE310/9/2018, Takaful's net profit rose 67% q-o-q or 73% y-o-y to RM84 million while revenue rose 20% q-o-q or 36% y-o-y to RM649 million. Revenue rose q-o-q due to higher sales generated from Family Takaful and General Takaful business.

Family Takaful business generated higher gross earned contributions of RM436.7 million, increased by 25%, as compared to RM350.2 million in the immediate preceding quarter. The increase was mainly attributable to higher sales from credit related products. General Takaful business generated gross earned contributions of RM177.1 million, increased by 10%, as compared to RM160.3 million in the immediate preceding quarter. The increase was mainly attributable to fire and motor classes.

Profit before zakat and taxation rose q-o-q mainly attributable to higher net wakalah fee income. To understand the fee structure, check out this link.


Table: Takaful's last 8 quarters' results


Graph: Takaful's last 50 quarters' results

Valuation

Takaful (at RM3.86 as at 11.30am) is now trading at a PE of 12.2 times (based on the last 4 quarters' EPS of 31.65 sen). For a growth stock with 3-year CAGR of 21%, Takaful's PEG ratio is about 0.6 time. As such, Takaful is deemed attractive.

Technical Outlook

Takaful has been range-bound for the past 3 years, with support at RM3.25 and resistance at RM4.00.


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

Conclusion

Based on satisfactory financial performance and attractive valuation, Takaful remains a good stock for long-term investment.

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.