Analysts positive on Tune Protect’s long term strategic plans

KUCHING: Tune Protect Group Bhd’s (Tune Protect) long term strategic plans have been viewed positively by analysts, with its growth prospects expected to be driven by its travel business.

In a statement, Tune Protect posted a gross written premiums (GWP) of RM122.1 million with operating revenue ( OR) of RM141.3 million, and a profit after tax (PAT) of RM13.4 million for the second quarter of 2018 (2Q18).

MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) said the growth in earnings was due to improvement in underwriting profits, which increased 42 per cent year-onyear (y-o-y).

This is followed from the drop in net claims (down 20.1 per cent y- o- y) and management expenses ( down 5.2 per cent y-o-y). In 2QFY18, it noted that underwriting profit was up by 22 per cent y-o-y.

Its first half of the financial year 2018 (1HFY18) combined ratio also saw an improvement as it fell by 4.6 percentage points ( ppts) y- o- y to 86.8 per cent while net claims ratio staged a robust improvement where it fell 6.3ppts (yo--y), due to favourable claim environment in the period, the research team added.

The combined ratio displayed a healthy cost structure in 1HFY18, standing at 86.8 per cent, which was better than the past two years average ratio, it pointed out.

“We believe as the company remained focus for a leaner cost structure, the group’s earnings prospect will continue to be driven by new revenuegenerating initiatives, which includes the roll out of innovative pricing mechanism.

“Notably, the Dynamic Pricing 2.0 initiative is expected to add three to five per cent in incremental revenue in the first year of its launch,” it opined.

“Moving forward, we believe that the group will continue to drive top- line earnings as AirAsia increases capacity.

“Consequently, it is expected to provide further excitement on the group’s travel insurance business. We believe the recent orders of 34 more A330neo by AirAsiaX will lend additional support in the long term.

“This is taking into account the potential increase of long-haul passengers flown by AirAsiaX, who have higher tendency to purchase travel insurance plan,” the research team projected.

All in, MIDF Research maintained its ‘buy’ call on the stock.

Higher fuel prices weighed, particularly on AirAsia X Bhd where they increased by around 25 per cent from a year earlier.The unit reported a second-quarter loss of RM57.5 million, reversing a profit of RM47.4 million a year earlier. — Reuters photo