KUALA LUMPUR: Shares of Tune Protect Group Bhd slid in early trade Friday after it reported a 28% fall in third quarter net profit.
The counter fell 8.22%, or six sen to 67 sen with 4.68 million shares traded.
Tune Protect’s net profit fell 28.3% to RM9.13mil in the third quarter ended Sept 30, 2018
(3QFY18) from RM12.73mil a year ago.
The lower earnings was due to lower net earned premiums of RM9.2mil, increased management expenses of RM7.6mil mainly due to higher employee, marketing and other administrative costs, and a decrease in net claims incurred of RM10.1mil.
Its quarterly operating revenue rose slightly to RM141.49mil from RM140.12mil in 3QFY17.
For the first nine months to Sept 30, the group's net profit rose by a marginal 2.2% to RM38.52mil from RM37.68mil a year ago.
Its operating revenue for the period increased 5.4% to RM425.7mil from RM404.08mil a year ago.
MIDF Research said Tune Protect’s earnings were below the house and consensus expectations, accounting for 61.5% and 65.7% of FY18 full year earnings estimates respectively.
“This was considered a negative surprise given the strong earnings growth momentum seen in 1HFY18 (+17.8%yoy) which we expect will continue to be seen in 2HFY18.
“We note that the growth was partially offset by the we ak 3QFY18 PATAMI, which fell by 37.8% yoy. This was primarily due to the increase in management and commission expenses in 3QFY18 of 23.8% yoy and 8.1%yoy respectively,” MIDF said.
On a positive front, MIDF observed that net claims have dropped for consecutive three quarters.
“Given that earnings came in below our expectations, we revised our earnings downwards for FY18F and FY19F to RM50.0mil and RM53.5mil respectively,” it said adding that it has maintained a “buy” call with adjusted target price of 85 sen.