KUALA LUMPUR: Tune Protect Group Bhd
is yet to see significant contributions to its earnings despite its various strategic tie-ups and digital initiatives.
AmInvestment research maintained its hold call on the group and lowered its fair value to 68 sen from 80 sen previously.
"This is based on a PB of 0.9x (previously 1.0x) on FY19 ROE of 10.5%. The lower forward PB multiple is based on a slightly higher risk premium as earnings remain opaque," it said on Monday.
The research house said earnings for FY18/19/20 have been revised by -13.0%/+4.8%/+3.6%
"This is after factoring in expenses for the recently completed voluntary separation scheme (VSS) of its 83.26%-owned Tune Insurance Malaysia Bhd (TIMB), which operates the general insurance business and the cost savings thereafter from the exercise."
The research house said a total of 58 employees' applications for the VSS have been approved, representing 15% of the total workforce.
The payment of RM4mil will be booked in 4QFY18, said AmInvestment.
"We anticipate this to increase TPG’s management expenses in the final quarter of FY18. We now project the group’s FY18’s management expense ratio to rise to 41.7% from our previous estimate of 39.0%, consequently raising its combined ratio to 94.7% for the financial year."
The research house said it would take about 13 months for the group to break even for the VSS payment.
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