Affin Hwang initiates Tune Protect with a ‘buy’ rating

KUCHING: The research arm of Affin Hwang Investment Bank Bhd (Affin Hwang Capital) is initiating Tune Protect Group Bhd ( Tune Protect) with a ‘buy’ rating.

Tune Protect is a digital insurance company that primarily services the travel insurance segment where its products are sold via its airline partners AirAsia and other ticketing platforms.

The research arm viewed its valuation as attractive vis-à-vis its peers at 2.8 per cent and is optimistic on the company’s longterm performance due to its scalable business model, financial technology (fintech) exposure and strong airline partners.

“Tune Protects scalable business model effectively allows it to serve multiple countries without applying for local insurance licenses or hiring large number of agents.

“It is also one of the trailblazers in fintech for the online insurance distribution of insurance products and we also expect the segment to benefit from the ambitious expansion plans of Tune Protects airline partners.”

While it seems Tune Protect is set to continue flying on tailwinds, the research arm cautions that there are still some headwinds set to hit the group in the short-term.

In particular, the Malaysian Aviation Commission’s ( MAVCOM) previous ruling to bar automatic add- ons of optional services during travel ticket purchases has negatively affected Tune Protects travel product sales.

“While we expect the take-up rate to be affected, we believe that with the expansion of the customer pool of Tune Protects airline partners; increases in average premium per policy; and mitigate steps taken by its management, the impact of the ruling should ease over time,” guided the research arm.

With that said, Affin Hwang Capital is forecasting a fall in headline net profit in FY17 for the company alongside a relatively flat FY18.

“On a core net profit basis, we expect FY17 to be flat but look for growth to resume at seven to 8.1 per cent y- o-y in FY18-19.