Takaful Malaysia - Islamic Insurance

Company :  Syarikat Takaful Malaysia Keluarga Berhad

 

Business : Insurance business breakdown to family Takaful (life + medical) and general Takaful (fire, motor, travel etc). Company also has business in Indonesia but Malaysia is still the largest contributor.

 

Clear growth of CAGR for revenue and PAT. PE of 8.35 is fair although some peers have lower PE.

 

 

Clear trend of growth and disrupted in 2020 due to COVID. However, 2021 seems picking up again. 

Revenue Split:

The revenue split between family and general takaful is approx. 70% to 30%. Under General Takaful motor is the largest contributor of 66%.

 Comparison with peer

 

Company	AIG	LPI	TAKAFUL
Price (RM)	13	13	3.7
PE	4.8	15.18	8.35
Revenue (latest FY)	5.9B	1.6B	2.9B
Profit Margin (%)	7.7	21.4	11.7
CAGR Revenue	5.6	4.8	10.6
CAGR PAT	11	1	18.4
Dividen Yield	4.80%	5.15%	3%
ROE (%)	11.57	17.97	21.94
(Efficiency to generate profit)
Dividen payment	Yes	Yes	Yes
Nos shares (million)	177.51	398.38	835.62

 

Comparison on potential 30% share price appreciation:

Company	Allianz	LPI	Takaful
Current price	13.04	13.98	3.66
30% appreciation	16.95	18.17	4.76
Peak price	16	17	7

 

 Lates result at glance

Generally lower due to COVID lockdown.

 

Prospect:

• Recovery play
• Capturing mass market & civil servants (leading position)
• Islamic insurance gaining popularity
• Digitalize marketing and online distribution

 

 

Risk:

• More death claims and surrender of policy (effects from Covid)
• Indonesia business affected.

 

Dividen every year end. Dividen yield is around 3% but pay only once a year.

 

Technical Analysis on Chart:

 

On the down trend due to heavy dumping from EPF. There is no clear sign of support at this moment. Price is actually very attractive.

 

At time of writing, I don’t have any Takaful shares yet but planning to make an entry.

 

Greatech - Riding on EV Boom!

Company : Greatech Technololgy Berhad

Business:

Factory automation in the booming sectors of solar, semiconductor, energy storage (EV) and life science. The key drivers/contributors are solar and EV sectors. Semiconductor may be cyclic but solar and energy storage is growing rapidly as the world is shifting to clean energy. Look at Telsa Motor and you will know why!

 

 Fundamental:

Company is in net cash position and no problem for expansion. See quick snap shot below.

 

 

 Important events in 2020 which see the revenue jumped as a result from solar and EV sectors.

 

 

 

Hopefully they can secure more orders from EV energy storage market. EV will be a global trend with China, USA and Europe leading the market. See note from below link.

https://www.power-technology.com/news/electric-vehicle-sales-surge-in-2021/

 

 

Nice profit margin. However, no information of CAGR revenue and PAT. Company is still new in Malaysia stock market.

 

Revenue track record

 

Revenue and profit will surpass 2020 and profit margin is healthy.

Peer comparison:

There is no direct comparison to Greatech (correct me if I am wrong). We can take a look at Vitrox, an inspection equipment manufacturer for semiconductor. The PE value for Vitrox is currently at 60. 

Interesting to note that Vitrox take some years to reach RM100 million profit. Greatech achieved it in short span of time. It just shows that EV and Solar are explosive sectors!  

 

  

Geographical Breakdown on revenue:

 

Two largest region of revenue contributors are Asia and America.

 

Product revenue split:

 

Risk:

• Limited number of customers.
• Cukai Makmur !!
• Order book not replenished fast enough.

 

Note from their report Q3 report

Quick estimation of 2022 revenue based on their outstanding order book of RM426 million will be : RM426x12/14 = RM365 million

The company need to secure 1 or 2 PLS order in the next 12 months otherwise profit will remain stagnant.

 

Prospect:

• Factory expansion in Batu-Kawan Penang
• Incorporated a subsidiary in USA. Hopefully this can help to secure more orders.
• Growth potential in Solar and EV sectors.
• Already gain reference from biggest thin-film solar module customer.

 

Technical Analysis:

 

At time of writing, I don’t have Greatech shares. However, I am waiting for opportunity to buy so to ride on the trend !