FIGURE 1: MNRB HOLDINGS
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2020 annual report.
1. GENERAL INTRO: MNRB’s core business is
in reinsurance as per the retakaful and takaful system according to the sharia
law. It provides reinsurance services in the areas of fire, marine, motor,
miscellaneous, and family retakaful.
2.
NOTABLE
POINTS:
a. In FY2020, the Group registered a 15.0% increase
in gross premiums and takaful contributions to RM2.3 billion as compared to the
RM2.0 billion recorded previously. The stronger performance came on the back of
higher gross premiums and contributions of its subsidiaries, namely Malaysian
Re, Takaful IKHLAS Family and Takaful IKHLAS General.
b. Malaysian Re is known to be the leading general
reinsurer in the domestic market with 60% market share. The company underwrites
all classes of general reinsurance business and has a strong focus on the
property segment. It is also ASEAN’s largest reinsurer by asset size and the
second largest by gross premiums. Approximately 40% of Malaysian Re’s business
comes from overseas markets.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 2552 million as
reported in 2020 annual report, this is a high revenue company. Between year
2012-2020, the counter’s revenue has been on an overall rising trend. On the
other hand, both of the Profit Before Tax (PBT) and Profit After Tax (PAT) are on
a slightly decreasing trend.
b. SHARE PRICE: from Jan 2016 to Jan 2021, share price range between RM1 to RM3. Lately its share price has surged abruptly to around RM1.50.
c. EARNING PER SHARE (EPS): earning per share in
last 5 years was overall worsening, whereby it decreased from 27.6 to 17.2 sen.
d.
PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is 6.23, which shows that the share price is not too expensive to invest in
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 9.2
million, which is around 0.1% of total assets. This shows that the management
is not making a major investment in the future growth and expansion of the
business.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2020 financial year, MNRB declared
a dividend payout of 2.5 sen to its shareholders, which amounts to a dividend
yield of 1.76%.
b.
DIVIDEND PAYOUT RATIO: The dividend-to-earnings
payout ratio is about 14.53%
c. CONSISTENCY: This counter’s dividend payout has
been inconsistent (dividend paid to shareholders in 1 years out of 5 years) in
the last five years, whereby dividends paid to shareholders ranged from 0 to 2.5
sen per share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2020 financial year, MNRB
reported a poor return of shareholders’ equity, at 5.85%.
b. COST-TO-INCOME RATIO: In FY2020, the calculated
cost-to-income ratio is 1591%. This shows that the cost of doing business is quite
high, which contributes to decreased earnings.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 305%, whereby its debt level is more than its equity, resulting in
a potentially unhealthy balance sheet.
d.
CASH FLOW: cash flow is positive, at around RM 118.3
million, equivalent to RM 0.15 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: This counter
is not well supported by institutional investors, there are only 6 institutional
investors at top 30 major shareholders list, including a few investment funds, but
not including insurance funds and retirement funds. Its major shareholders are Amanah
Saham Bumiputera (44.1%) and Permodalan Nasional Berhad (12.79%).
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