Syarikat Takaful Malaysia Keluarga Bhd (Takaful Malaysia) is positioned to deliver improved financial results in the coming quarters, supported by a structural realignment in its product portfolio and a focus on margin expansion.
Affin Hwang Investment Bank Research has reaffirmed its “buy” rating on the company, maintaining a 12-month target price of RM3.80. The research firm attributed its bullish outlook to the insurer’s evolving business model, which it expects to drive faster profit recognition and bolster long-term shareholder returns.
A key driver behind this optimism is Takaful Malaysia’s strategic transition towards shorter-tenure Credit Takaful products, particularly personal financing (PF) offerings, which are increasingly displacing the traditionally dominant mortgage reducing term Takaful (MRTT) plans. This shift has been catalysed by bancatakaful partners imposing a 10-year cap on mortgage refinancing tenures, prompting a larger share of borrowers to opt for shorter-term personal financing solutions.
The ratio of MRTT to PF within the portfolio has notably shifted from 65:35 to 32:68, a trend that Affin Hwang views as a catalyst for faster profit emergence. The shorter average tail-length of these products enables more front-loaded delivery of services, expediting the realisation of the contractual service margin.
While the full financial impact may not be immediately evident in 2025, the research house anticipates the earnings uplift to gain traction in the second half of the year and beyond, enhancing the company’s overall earnings trajectory and return on equity.
Despite facing a sector-wide slowdown in demand for medical and hospitalisation takaful products—driven by rising medical inflation and annual premium repricing—Takaful Malaysia is leveraging this environment to focus on profitability. With many consumers reducing or discontinuing their medical coverage, insurers have an opportunity to optimise margins. Takaful Malaysia is capitalising on this by selectively underwriting higher-quality accounts.
The strategy has already yielded strong early results. In the first quarter of 2025, the company’s employee benefits segment recorded a substantial 77% year-on-year increase, supported by both volume growth and repricing initiatives.
From a valuation perspective, Takaful Malaysia continues to present an attractive proposition. It currently trades at 7.6 times forward earnings—significantly below the sector average of approximately 10.5 times—while offering a projected dividend yield of between 5.2% and 5.5% for the period 2025 to 2027.
-The Star
