TUNEINS (5230) - Tune Ins Holdings Bhd - Firing on all cylinders in 2015
Target RM3.00 (Stock Rating: ADD)
At 104% of our forecast and 105% of the consensus number, Tune’s FY14 net profit met expectations. The full-year net DPS of 3.86 sen was slightly higher than our projected 3.6 sen. We are positive on the strong recovery in its 4QFY14’s earnings following the weak performance in the 2Q-3Q14. Our DDM-based target price (COE of 9.2%; LT growth of 5%) is intact. We still rate Tune an Add as the stock is loaded with the following potential re-rating catalysts: (1) swift expansion of the travel insurance (TI) business in the region; (2) bright prospects for its non-life insurance unit in Thailand; (3) more tie-ups with other airlines; and (4) EPS-accretive M&A in Indonesia.
A decent growth for TI business despite headwinds
2014 was a tough year for Tune’s TI business due to the unfavourable operating environment in Thailand in 2Q and 3Q, and problems with AirAsia’s booking engine. These suppressed the growth of its total policies earned in 2014 to only 1.7%. However, its TI business still managed to turn in a healthy 9.3% growth in net profit to RM58.4m in FY14, on the back of an 8.8% rise in net earned premium.
Higher topline for TIMB but…
The gross premium of its non-life insurance unit, Tune Insurance Malaysia Berhad (TIMB) rose by 11.1% to RM378.1m in FY14. However, its FY14 net profit inched lower by 0.3% after the contributions to Malaysian Motor Insurance Pool (MMIP) due to higher net claims (for fire and medical insurance in 3Q14 and for floods in 4Q14) and management expenses (arising from employee benefits and one-off union settlement).
Cruising ahead in 2015
Investors are advised to accumulate the stock as we envisage better prospects for Tune in 2015. The growth will be led by its travel insurance business, as we see the maiden full-year contributions from its entities in the Middle East and Thailand. Other potential rerating catalysts are more tie-ups with other airlines and EPS-accretive M&As in Indonesia.
Source: CIMB Daybreak - 26 February 2015
Target RM3.00 (Stock Rating: ADD)
At 104% of our forecast and 105% of the consensus number, Tune’s FY14 net profit met expectations. The full-year net DPS of 3.86 sen was slightly higher than our projected 3.6 sen. We are positive on the strong recovery in its 4QFY14’s earnings following the weak performance in the 2Q-3Q14. Our DDM-based target price (COE of 9.2%; LT growth of 5%) is intact. We still rate Tune an Add as the stock is loaded with the following potential re-rating catalysts: (1) swift expansion of the travel insurance (TI) business in the region; (2) bright prospects for its non-life insurance unit in Thailand; (3) more tie-ups with other airlines; and (4) EPS-accretive M&A in Indonesia.
A decent growth for TI business despite headwinds
2014 was a tough year for Tune’s TI business due to the unfavourable operating environment in Thailand in 2Q and 3Q, and problems with AirAsia’s booking engine. These suppressed the growth of its total policies earned in 2014 to only 1.7%. However, its TI business still managed to turn in a healthy 9.3% growth in net profit to RM58.4m in FY14, on the back of an 8.8% rise in net earned premium.
Higher topline for TIMB but…
The gross premium of its non-life insurance unit, Tune Insurance Malaysia Berhad (TIMB) rose by 11.1% to RM378.1m in FY14. However, its FY14 net profit inched lower by 0.3% after the contributions to Malaysian Motor Insurance Pool (MMIP) due to higher net claims (for fire and medical insurance in 3Q14 and for floods in 4Q14) and management expenses (arising from employee benefits and one-off union settlement).
Cruising ahead in 2015
Investors are advised to accumulate the stock as we envisage better prospects for Tune in 2015. The growth will be led by its travel insurance business, as we see the maiden full-year contributions from its entities in the Middle East and Thailand. Other potential rerating catalysts are more tie-ups with other airlines and EPS-accretive M&As in Indonesia.
Source: CIMB Daybreak - 26 February 2015
