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Looking back at TAKAFUl after Nov'25, nothing changed. Fundamental is still rock solid, the variable income portion - investment profits from its bond and equity holdings should hold up relatively well over the last few months. KLCI took a modest retracement, but fixed income (MGS bonds) should have performed well, as evidenced by MYR's strength despite the flight to safe havens due to the Middle East war.
Its core business profit reporting should be on track for a steady rise as the effect of MFRS17 (which locks up upfront premium profit and normalizes release over the years) unwinds. MHIT gains greater clarity, and a consolidation in the insurance industry should bode well for earning visibility over the mid-term horizon.
Structurally, it is just a safe, boring, predictable mid-cap with good yields (20-30% above risk-free rate like FD, ASM or MGS). The recent tax introduction on REITs should have forced an exodus of foreign funds, but if these foreign funds have a mandate to retain their capital in MYR holdings, after liquidating their cash flow position from REITs, where can they go? Finance and plantation are arguably the beneficiaries. Banking and plantation are rather overextended, insurers should experience some spillover from these excess capital.
Betul. I am convinced that its value is at least RM4 in due time. Not in a straight line, but who cares, you're pocketing 5-6% a year. Dividend payout is growing, strong structural demand shielded from global volatility, inflation, and growth-resistant, a must-have in a portfolio as a defensive position. Mark my words, revisiting this in 27 or 28
Note: It is not difficult to observe that TAKAFUL, being a semi/mid tier "blue chip", is heavily guarded by local institutional funds. Movements are "computerised" or "unnatural" to say the least, hence it is futile to try looking at short-term share price movement to optimize entry/exit.
Personally, I compartmentalize and swing a "tactical" portion of my total holdings (eg. 20%). Selling when prices are apparently overextended and buying back at lower prices. I did this late Feb when markets were showing weakness, trimming at 3.40+ and buying back when the Iran war started (3.1-3.2). I've also trimmed this tactical portion at around 3.5 2 days ago. This is purely to
1）Try optimizing your cost price basis
2) Feel "involved" when my fingers feel itchy to trade
By no means it is significant or viable over a long term horizon
Not really. 3.20-3.4+ is the “natural habitat” for Takaful to hover around. I believe it is the “default” range set by institutional investors. Movements within this price range is purely algorithmic I believe and thus, can be completely random/unpredictable. No edge in trading this range, only attractive if it gets below 3.10 or goes above 3.6 (trim some tactical position)
tax rate consistently remain higher than Malaysia statutory corporate tax rate of 24%, occasionally （tax+zakat）surging to peaks between 31% and 37%. thats why..
Management acknowledged that despite good revenue and PBZT growth, PAZT was fluctuating due to high effective tax rate. It affected the share price. In fact 2025 EPS at 44 cent is lower than 2024 at 45 cent. They are working with Inland Revenue to get tax deductibility for bancatakaful amortisation. If they succeed the effective tax rate would be close to standard corporate tax rate. In my opinion they should push hard for it, engaging the best lawyers to bring the matters to court if necessary.
They have Indonesian subsidiary which makes very slim profit. But that has nothing to do with the high effective tax rate. High tax is mostly due to Inland Revenue doesn't allow them to deduct certain expenses. As a results, their profits are deemed higher from tax perspective, and therefore have to pay more tax. They went from very low effective tax (before 2022) to very high tax rate (30+ percent) now. A handicap that few shareholders would have expected a few years ago. At that time most people probably were concerned about MFRS17 and the dividend cuts. Those concerns have been resolved by now.
zakat itself not subject to corporate tax, it’s an mandatory expense for the company.
2023 Tax+zakat=31%（Tax29%）
2024 Tax+zakat=34%（Tax32%）
2025 Tax+zakat=37%（Tax31%）
