RHB Investment Bank Bhd (RHB Research) maintains a NEUTRAL rating on Syarikat Takaful Malaysia Keluarga (STMB) with a target price of RM3.20, implying a 5% upside, as the house highlighted potential headwinds from elevated tax rates, maiden finance costs and the Sales & Service Tax (SST) that could cap earnings growth in 2025 and 2026.
Despite a 22% year-to-date decline in share price, the stock continues to trade at a premium valuation compared with peers, which the analysts say is justified given its market leadership.
STMB remains the largest family takaful operator in Malaysia, holding a 27.8% market share as of June 2025, and recorded 19% year-on-year growth in gross direct contributions (GDC) for the first half of the year, compared to the industry’s slower 2% growth.
In the general takaful segment, the group ranks second with a 22.8% market share, posting 5% YoY GDC growth, while motor takaful sales contributed less aggressively to expansion.
The house noted that the company’s strong brand equity and wide bancatakaful network, including a new distribution agreement with RHB Islamic Bank, positions it well to expand into non-credit retail takaful products such as solar panels and home asset protection.
To strengthen its capital base, STMB recently launched a RM1 billion Tier 2 sukuk wakalah programme, intending to issue RM500 million for working capital and digital infrastructure investments.
The sukuk’s AA3 credit rating implies an indicative profit rate of around 4% per annum, translating to maiden finance costs of about RM20 million per year. Analysts factored this into a 3% trim of FY26 and FY27 earnings forecasts.
STMB’s core focus remains on family takaful products, which currently constitute approximately 90% of its contractual service margin balance, while the group aims to grow non-credit retail segments that are also accretive to contractual service margins.
Despite the headwinds, the analysts maintain that STMB’s dominant market position, coupled with its capital adequacy ratio remaining above the regulatory floor of 130%, justifies its premium valuation. The target price of RM3.20 is based on a 0.75x price-to-comprehensive equity (P/CE) multiple, with no adjustment for ESG considerations.
RHB Research cautions that while STMB continues to benefit from its market leadership and solid capitalisation, the looming finance costs, SST impact, and elevated tax rates may constrain earnings growth, making the NEUTRAL stance appropriate for investors evaluating both risks and stable market positioning.
