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 !

Petronas Gas - Benefits from Natural Gas Hike?

Company : Petronas Gas Berhad

Business :

A gas infrastructure company rather than a pure natural gas selling company. The company has the infrastructure of processing gas, transport gas, LNG regasification and provide utilities to other petrochemical plants. There 4 business units and the summaries are as follow:

 Gas processing

Gas transportation

LNG regasification Terminals

Note: LNG – Gas is cool down for easy transportation. Regasification is turning LNG to gas again.

 

 

Utilities

 

 Good profit margin but very small CAGR in revenue and PAT.

 

10 years revenue record:

Profit margin stable at around 35%.

 

Growth opportunity

• The price is regulated by EC, so no growth even natural gas spike up. See note from the CEO.
• New gas power plants.
• Construction of Cogen plants.
• Building LNG storage tank no.3 in Pengerang (not sure any financial contribution).

 

 

Risk

• No risk business.
• Not even effected by COVID or any lockdown!

 

Dividen History

Attractive and pay dividen every quarter as business is super stable. Total for FY 2021 should be at least 82 cents and potential higher!

 

Technical Analysis on Chart

Not much of fluctuation on price as major shareholders are big institutions.  Any price near RM16 is good to accumulate for its dividen. This is very stable business for the company. Gas is still relevant for many years to come.

 

At time of writing, I don’t have any PetGas share.

Superlon - The Insulation Company

 

Company : Superlon Holding Berhad

Business : Manufacture and sales of insulation tubes, nitrile butadiene rubber for HVAC&R industry. Company also doing trading HVAC&R parts (copper pipes). Products are mainly for export market with factory in Malaysia and Vietnam. See note below. It is a Taiwanese managed company.

 

 

Manufacturing locations

 

Company is in net cash position. However, no growth in CAGR on profit after tax. Small cap company with maximum revenue of RM100 million.

 

10 years revenue

Revenue stagnant at RM100 million and profit margin is declining after FY 2017. It seems that cost is rising up and eroding their margins.

 

Geographical breakdown of revenue as follow:

 

Breakdown of Malaysia revenue.

 

Lates Q1 result:

Q1 result dropped when compared YoY and QoQ. The worst is not over yet as Q2 is from August to October where Vietnam plant has shutdown.

 

 

Prospect:

• Market penetration to Oceania and Africa but not sure the contribution.

 

Risk:

• Vietnam plant shutdown
• Soft global demand
• Raw material butadiene cost – synthetic rubber rising?

 

Dividen:

Dividen is stable as company still have RM20 million cash but will drop. Pay-out ratio is 30%. See dividen chart below.

 

 

 Technical Analysis on Chart

Forming triangle but will take long time before breakout.

 

At time of writing, I don’t have Superlon share. However, it is interesting to know that Cold-Eye is major shareholder of this company.