BUY maintained

MNRB’s 1QFY25 results were above expectations, riding on still robust earnings growth at its reinsurance and general takaful divisions. We upgrade our FY25/26E earnings by 92%/76% and raise our TP to MYR2.70 from MYR1.70, pegging its CY25E earnings to its updated long-term forward rolling PER mean of 5.5x. BUY maintained.

Above expectations

MNRB reported a 1QFY25 net profit of MYR92.2m (+33% YoY) which was above our expectations. The variance was largely on account of better- than-expected contributions from both its reinsurance and general takaful divisions. This was partially offset by lower YoY earnings from its family takaful business.

Growth driven by reinsurance and general takaful

Reinsurance revenue was generally flat YoY, expanding marginally for its international business, particularly from its Specialty portfolio. Nevertheless, its net profit jumped 44% YoY largely on account of lower claims during the quarter. The general takaful division saw its net profit jump 69% YoY, driven by higher takaful revenue earned from motor and fire businesses. Offsetting these increases was a 5% YoY dip in the net profit of its family takaful business, as a result of a reduction in its banca takaful business.

Raising TP to MYR2.70

Following from the strong results in 1QFY25, we have raised our FY25E and FY26E net profit forecasts by 92% and 76% respectively, on expectations that the earnings momentum will be sustainable. Correspondingly, our TP is raised to MYR2.70 from MYR1.70, as we roll forward and peg CY25E valuations to its updated long-term forward rolling PER mean of 5.5x. Our previous GGM methodology pegged valuations to an implied forward rolling PER mean of 6.1x.

Source: Maybank Research - 19 Aug 2024