PETALING JAYA: Elevated tax rates, maiden finance costs and the expanded sales and service tax implementation may cap Syarikat Takaful Malaysia Keluarga Bhd

’s (Takaful Malaysia) earnings growth potential in the financial year 2025 (FY25) and FY26.

RHB Research said the 22% correction in the takaful operator’s share price year-to-date is justified and the stock is still trading at a premium valuation versus its peers.

Takaful Malaysia is the market leader in the family and general takaful industries.

As at June, it was the largest family takaful operator with a 27.8% market share and second biggest in the general takaful industry with a 22.8% market share.

The research house noted Takaful Malaysia’s family takaful products such as mortgage and personal financing protection would remain a focus area, accounting for about 90% of the group’s contractual service margin balance.

The company is, however, looking to expand in the non-credit retail takaful segment through the offering of financial products for solar panels and home assets, among others.

“We think Takaful Malaysia’s brand equity and wide bancatakaful network are advantageous in this regard.

“Under its new bancatakaful deal with RHB Islamic Bank, it will have access to distribute such products to RHB’s wealth clients,” RHB Research stated

Meanwhile, Takaful Malaysia has launched a RM1bil tier two sukuk wakalah programme to solidify its capital position with RM500mil of the money to be directed towards working capital purposes and investments in digital and information technology infrastructure.

As a result of the sukuk programme, RHB Research has trimmed its FY26 and FY27 earnings forecast for Takaful Malaysia by 3%.

It has also changed its valuation methodology to price-to-comprehensive equity method.

Despite the headwinds identified, the research house however maintained its “neutral” call on Takaful Malaysia with a lower target price of RM3.20 a share from RM3.40 earlier.