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14 July 2025
Syarikat Takaful M’sia Keluarga (STMB MK)
Assessing The Expanded Tax Impact; D/G To NEUTRAL
- Cut to NEUTRAL from Buy, new MYR3.70 TP from MYR4.10, 8% upside and c.4% FY25F yield. The expanded sales & services tax (SST) scope now covers bancassurance and bancatakaful commissions, and is scheduled to take effect on 1 Sep 2025. We think the impact could be material to Syarikat Takaful Malaysia Keluarga, given its strong bancatakaful franchise, while the group’s immediate pass-through ability, according to management, is limited.
- A hit from SST scope expansion. Bancassurance commissions will be taxable at 8% (from 0%) under the expanded SST scope effective 1 Sep 2025 (Phase 2 implementation). The bancatakaful channel contributes to almost half of STMB’s gross contributions, and primarily drives its credit-related takaful sales. While management has yet to provide official guidance on its expected earnings impact, we estimate the additional SST payable by STMB to amount at least MYR20m per annum on a full-year basis. This is on top of potential SST incurred on sales incentives fees and upfront fees for bancatakaful agreement renewals. Management thinks it has limited capacity to pass on the additional tax to its policyholders at this juncture, given the increased scrutiny on insurance and takaful premiums due to the ongoing medical premium inflation situation.
- Mitigating factors. While STMB will absorb the SST impact in the immediate term, the group thinks there is scope for potential repricing of new credit-related takaful certificates further out – especially if public sentiment on insurers improves – though no timeline was provided. In the meantime, STMB, alongside other insurers and takaful operators, are in the midst of discussions with the Inland Revenue Board and Ministry of Finance to negotiate down the new SST for bancassurance commissions and related expenses. However, we think the uncertainty surrounding the outcome of such negotiations could likely prove an overhang on the sector.
- Overnight policy rate (OPR) cut – a small silver lining. The central bank’s 25bps cut to the benchmark interest rate is expected to have an indirect positive impact on STMB. A lower cost of borrowings could help to spur demand for financing, boosting volume growth and/or lifting average ticket sizes for STMB’s credit-related takaful products (eg mortgages, personal finance). Additionally, STMB could also enjoy higher investment returns through marked-to-market gains on fixed income instruments alongside a potential boost should equity markets rebound.
- We slash our FY26-27 earnings estimates by 5%, while our FY25 forecasts are cut by a smaller 1% as we only account for four months of SST payable. Our net profit growth forecasts for FY26 moderate to 1% (from c.5%), which, on top of the ongoing SST negotiations and medical inflation-related developments, could likely cap the counter’s potential upside.
Syarikat Takaful M’sia Keluarga (STMB MK) – Price Chart
The chart shows the price close and relative performance to FBM KLCI from July 2024 to July 2025. The price fluctuates between approximately MYR 3.3 and MYR 4.2.
Source: Bloomberg
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Reported net profit (MYRm) | 347 | 378 | 389 | 393 | 419 |
| Net profit growth (%) | 22.6 | 9.0 | 2.8 | 1.1 | 6.5 |
| Recurring net profit (MYRm) | 347 | 378 | 389 | 393 | 419 |
| Recurring EPS (MYR) | 0.41 | 0.45 | 0.45 | 0.45 | 0.48 |
| BVPS (MYR) | 2.01 | 2.29 | 2.57 | 2.88 | 3.21 |
| DPS (MYR) | 0.14 | 0.17 | 0.14 | 0.14 | 0.15 |
| Recurring P/E (x) | 8.25 | 7.56 | 7.67 | 7.59 | 7.13 |
| P/B (x) | 1.7 | 1.5 | 1.3 | 1.2 | 1.1 |
| Dividend Yield (%) | 4.1 | 5.0 | 4.2 | 4.2 | 4.5 |
| Return on average equity (%) | 22.5 | 21.0 | 18.7 | 16.5 | 15.8 |
Source: Company data, RHB
Overall ESG Score: 3.0 (out of 4)
E Score: 2.7 (GOOD)
S Score: 3.0 (GOOD)
G Score: 3.7 (EXCELLENT)
Please refer to the ESG analysis on the next page
Emissions And ESG
Trend analysis
STMB began disclosing its GHG emissions in FY24. The year will also serve as the baseline year for future emissions tracking.
| Emissions (tCO2e) | Dec-22 | Dec-23 | Dec-24 | Dec-25 |
|---|---|---|---|---|
| Scope 1 | – | – | 5 | na |
| Scope 2 | – | – | 3,983 | na |
| Scope 3 | – | – | 1,340 | na |
| Total emissions | na | na | 5,328 | na |
Source: Company data, RHB
Latest ESG-Related Developments
Takaful protection for solar panels: STMB recently launched a takaful protection plan for solar panels, insuring customers against risks such as fire, lightning, storms and accidents.
Additional ESG-linked offerings: STMB has plans to launch a takaful plan with a charity feature, in which 5% of contributions will be donated to orphanages.
ESG Unbundled
Overall ESG Score: 3.0 (out of 4)
Last Updated: 27 May 2025
E Score: 2.7 (GOOD)
STMB began disclosing its Scope 1, 2 and 3 GHG emissions in the FY24 annual report, in compliance with the GHG Protocol Corporate Accounting and Reporting Standards. The group recorded a substantial YoY drop in water usage in FY24, though electricity consumption was a slight increase. STMB offers multiple ESG-linked products, including takaful protection plans for solar panels and electric vehicles.
S Score: 3.0 (GOOD)
STMB’s community-based activities are carried out through its Takaful myJalinan arm, which has impacted many groups including underprivileged communities, families and students. The group operates Malaysia’s first digital takaful operator, Kaotim, showcasing its commitment to enhancing financial inclusion.
G Score: 3.7 (EXCELLENT)
The board consists of six independent directors and one non-independent director, among whom two directors are female. Board members, senior management, and employees are well trained in matters of compliance, risk management, and business best practices.
ESG Rating History
The ESG rating has been consistently at 3.0 from July 2023 to July 2025.
Source: RHB
Financial Exhibits
Valuation basis
GGM-derived based on:
- CoE of 13.0%;
- Long-term growth of 3.5% and;
- Sustainable ROE of 16.0%.
Key drivers
Our FY25 forecasts are most sensitive to changes in:
- Takaful revenue;
- Claim ratios; and
- Investment returns.
Key risks
Key risks include:
- Slowdown in takaful sales;
- Higher claim ratios; and
- Lower investment returns.
The opposite represents the upside risks.
Company Profile
Syarikat Takaful Malaysia Keluarga provides shariah-compliant general and family insurance whereby the risk is voluntarily and collectively shared by a group of participants.
Income statement (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Insurance revenue | 2,942 | 3,576 | 3,569 | 3,801 | 4,035 |
| Incurred claims | (1,516) | (1,819) | (2,197) | (2,336) | (2,477) |
| Directly attributable expenses | (556) | (590) | (1,029) | (1,121) | (1,189) |
| Reinsurance result | 72 | (59) | (63) | (66) | (70) |
| Insurance service result | 175 | 218 | 279 | 278 | 299 |
| Gross investment income | 533 | 561 | 643 | 661 | 680 |
| Net fair value gains/(losses) | (3) | 43 | (99) | (102) | (87) |
| Investment return | 530 | 605 | 543 | 559 | 593 |
| Operating revenue | 3,476 | 4,137 | 4,211 | 4,462 | 4,714 |
| Net financial result | (190) | (241) | (218) | (226) | (240) |
| Other income/(expenses) | (9) | (9) | (6) | (6) | (7) |
| Pre-tax profit | 508 | 575 | 598 | 605 | 644 |
| Taxation | (161) | (197) | (209) | (212) | (225) |
| Reported net profit | 347 | 378 | 389 | 393 | 419 |
| Recurring net profit | 347 | 378 | 389 | 393 | 419 |
Profitability ratios
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Claims ratio (%) | 51.5 | 50.9 | 61.6 | 61.4 | 61.4 |
| Expense ratio (%) | 19.1 | 16.7 | 29.0 | 29.7 | 29.7 |
| Reinsurance ratio (%) | 2.4 | (1.7) | (1.8) | (1.7) | (1.7) |
| Underwriting margin (%) | 5.9 | 6.1 | 7.8 | 7.3 | 7.4 |
| Gross investment yield (%) | 6.0 | 5.7 | 6.1 | 6.1 | 6.1 |
| Net investment yield (%) | 5.9 | 6.1 | 5.1 | 5.2 | 5.3 |
| Return on average assets (%) | 2.6 | 2.8 | 2.9 | 2.9 | 3.1 |
| Return on average equity (%) | 22.5 | 21.0 | 18.7 | 16.5 | 15.8 |
| Dividend payout ratio (%) | 33.8 | 37.6 | 32.0 | 32.0 | 32.0 |
Balance sheet (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Tangible fixed assets | 333 | 332 | 346 | 361 | 376 |
| Intangible assets | 25 | 27 | 27 | 27 | 27 |
| Total investments | 9,260 | 10,574 | 10,659 | 10,961 | 11,272 |
| Other assets | 2,447 | 2,781 | 4,176 | 5,182 | 6,096 |
| Cash at bank | 851 | 650 | 714 | 786 | 864 |
| Total assets | 14,408 | 16,666 | 18,455 | 20,102 | 21,700 |
| Other liabilities | 12,693 | 14,714 | 16,177 | 17,556 | 18,865 |
| Total liabilities | 12,693 | 14,714 | 16,177 | 17,556 | 18,865 |
| Shareholders’ equity | 1,679 | 1,917 | 2,244 | 2,512 | 2,800 |
| Total equity | 1,714 | 1,951 | 2,278 | 2,546 | 2,834 |
| Contractual service margin | 1,218 | 1,370 | 1,511 | 1,643 | 1,769 |
Growth
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Insurance revenue growth (%) | 14.5 | 21.5 | (0.2) | 6.5 | 6.1 |
| Investment result growth (%) | 35.9 | 14.1 | (10.2) | 2.9 | 6.0 |
| Incurred claims growth (%) | (24.6) | 20.0 | 20.8 | 6.3 | 6.0 |
| Contractual service margin growth (%) | (2.2) | 12.5 | 10.3 | 8.8 | 7.6 |
| Net profit growth (%) | 22.6 | 9.0 | 2.8 | 1.1 | 6.5 |
| EPS growth (%) | 22.6 | 9.0 | (1.4) | 1.1 | 6.5 |
Source: Company data, RHB
Revisions to estimates
The sole change to our earnings estimates was to takaful service expenses, where we impute an additional c.MYR30m charge pa from bancatakaful-related SST (ie c.MYR20m SST on commissions and the remainder (estimated) on SST on sales incentive fees and upfront fees for bancatakaful agreement renewals) for FY26F and FY27F. For FY25F, we assume a smaller incremental charge of c.MYR10m, ie four months’ worth of SST payable on the affected services.
Figure 1: Adjustments to full-year earnings forecasts
| FYE Dec | Net profit (MYR m) | Diluted EPS (MYR) | DPS (MYR) | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Previous | Revised | % Chg | Previous | Revised | % Chg | Previous | Revised | % Chg | |
| 2025F | 394 | 389 | -1.4% | 0.45 | 0.45 | -1.4% | 0.14 | 0.14 | -1.4% |
| 2026F | 414 | 393 | -5.1% | 0.47 | 0.45 | -5.1% | 0.15 | 0.14 | -5.1% |
| 2027F | 441 | 419 | -5.1% | 0.51 | 0.48 | -5.1% | 0.16 | 0.15 | -5.1% |
Source: Company data, RHB
Valuation and TP
Our TP is revised to MYR3.70 (from MYR4.10), and is based on a lower GGM-derived P/BV of 1.29x (from 1.58x), below -1SD from the counter’s mean. Key changes to our GGM model include: i) A lower ROE assumption of 16.0% (from 18.5%) in line with our earnings revisions, ii) a slightly higher cost of equity assumption of 13.2% (from 13.0%) to account for the sentiment risk related to the new SST regulations, and iii) a higher BVPS assumption of MYR2.88 (from MYR2.58) as we rolled forward our valuation year to FY26F. Our TP includes zero ESG premium/discount, as STMB’s ESG score of 3.0 is in line with the country median.
Figure 2: STMB – GGM valuation
| Risk free rate (%) | 4.0 | Sustainable ROE (%) | 16.0 |
| Equity premium (%) | 9.0 | COE (%) | 13.2 |
| Beta (x) | 1.0 | Long-term growth (g) | 3.5 |
| Cost of equity – CAPM (%) | 13.2 | Implied P/BV (x) | 1.29 |
| BVPS – FY26F | MYR2.88 | ||
| ESG premium/(discount) | 0 | ESG premium/(discount) | MYR3.70 |
| TP (rounded) | MYR3.70 |
Source: Company data, RHB
Figure 3 & 4: Forward P/E and P/BV Charts
Figure 3 (STMB’s 12-month forward P/E) shows the Forward P/E ratio from Jan-17 to Jan-25, fluctuating between approximately 7.8x and 12.1x, with a mean of 10.0x.
Figure 4 (STMB’s 12-month forward P/BV against ROE) shows the Forward P/BV and ROE from Jan-17 to Jul-24. The P/BV fluctuates between approximately 1.55x and 3.08x, with a mean of 2.31x. ROE ranges from about 13% to 28%.
Source: Bloomberg, RHB
Recommendation Chart
The recommendation chart shows the stock price and target prices from July 2020 to January 2025. The stock price fluctuated mostly between MYR 3.40 and MYR 5.40.
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-05-27 | Buy | 4.10 | 3.46 |
| 2025-02-26 | Buy | 4.60 | 3.49 |
| 2024-12-02 | Buy | 4.90 | 3.82 |
| 2024-05-28 | Buy | 4.40 | 3.91 |
| 2024-02-27 | Buy | 4.40 | 3.73 |
| 2023-10-26 | Buy | 4.30 | 3.67 |
| 2023-06-01 | Buy | 3.90 | 3.32 |
| 2023-02-26 | Buy | 4.00 | 3.48 |
| 2022-08-04 | Buy | 4.00 | 3.36 |
| 2022-05-12 | Buy | 4.40 | 3.52 |
| 2022-02-25 | Buy | 4.90 | 3.70 |
| 2021-11-24 | Buy | 4.20 | 3.63 |
| 2021-08-25 | Buy | 5.40 | 4.52 |
| 2021-02-23 | Buy | 5.70 | 4.36 |
| 2020-11-24 | Buy | 5.60 | 4.78 |
Source: RHB, Bloomberg
Disclaimers and Disclosures
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
Investment Research Disclaimers
This report is not intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to the applicable laws or regulations. All the information contained herein is based upon publicly available information and has been obtained from sources that RHB believes to be reliable and correct at the time of issue of this report. However, such sources have not been independently verified by RHB and/or its affiliates and this report does not purport to contain all information that a prospective investor may require. The research analysts responsible for the production of this report hereby certifies that the views expressed herein accurately and exclusively reflect his or her personal views and opinions about any and all of the issuers or securities analysed in this report and were prepared independently and autonomously.
RESTRICTIONS ON DISTRIBUTION
Malaysia
This report is issued and distributed in Malaysia by RHB Investment Bank Berhad (“RHBIB”). The views and opinions in this report are our own as of the date hereof and is subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. RHBIB has no obligation to update its opinion or the information in this report.
Indonesia
This report is issued and distributed in Indonesia by PT RHB Sekuritas Indonesia. This research does not constitute an offering document and it should not be construed as an offer of securities in Indonesia. Any securities offered or sold, directly or indirectly, in Indonesia or to any Indonesian citizen or corporation (wherever located) or to any Indonesian resident in a manner which constitutes a public offering under Indonesian laws and regulations must comply with the prevailing Indonesian laws and regulations.
Singapore
This report is issued and distributed in Singapore by RHB Bank Berhad (through its Singapore branch) which is an exempt capital markets services entity and an exempt financial adviser regulated by the Monetary Authority of Singapore. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, RHB Bank Berhad (through its Singapore branch) accepts legal responsibility for the contents of the report to such persons only to the extent required by law.
United States
This report was prepared by RHB and is meant for distribution solely and directly to “major” U.S. institutional investors as defined under, and pursuant to, the requirements of Rule 15a-6 under the U.S. Securities and Exchange Act of 1934, as amended. RHB is not registered as a broker-dealer in the United States and does not offer brokerage services to U.S. persons.
DISCLOSURE OF CONFLICTS OF INTEREST
RHB Investment Bank Berhad and its subsidiaries (“RHBIB Group”) form a diversified financial group. In the ordinary course of its business, any member of the RHBIB Group may have business relationships with, hold positions in, or perform services for any of the subject companies covered in this research report. While RHBIB Group has internal controls to manage conflicts of interest, investors should be aware that such conflicts may exist and should exercise their own judgment.
Malaysia: Save as disclosed in the link RHB Research Conflict Disclosures Jul 2025 and to the best of our knowledge, RHBIB declares that it does not have a financial interest in, is not a market maker of, and its staff do not serve as directors of the subject company. RHBIB did not receive compensation for investment banking services from the subject company in the past 12 months.
Indonesia & Singapore: Similar disclosures apply. For detailed information, please refer to the full report.
Analyst Certification
The analyst(s) who prepared this report certify that: (1) they do not have any financial interest in the securities or other capital market products of the subject companies mentioned in this report, and (2) no part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report.
Contact Information
KUALA LUMPUR
RHB Investment Bank Bhd
Level 3A, Tower One, RHB Centre
Jalan Tun Razak
Kuala Lumpur 50400
Malaysia
Tel: +603 2302 8100
Fax: +603 2302 8134
JAKARTA
PT RHB Sekuritas Indonesia
Revenue Tower, 11th Floor, District 8 – SCBD
JI. Jendral Sudirman Kav 52-53
Jakarta 12190
Indonesia
Tel: +6221 5093 9888
Fax: +6221 5093 9777
SINGAPORE
RHB Bank Berhad (Singapore branch)
90 Cecil Street
#04-00 RHB Bank Building
Singapore 069531
Fax: +65 6509 0470
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