PETALING JAYA: Amid improving prospects, further upside is projected for Tune Protect Group Bhd
’s shares, which have already posted decent gains since the start of this year.
According to TA Research, the general insurance provider will likely see continued improvement in its earnings for the second quarter ended June 30, 2023 (2Q23). This optimism is supported by the continued recovery in the travel industry post-pandemic, which bodes well for the company’s travel segment.
The brokerage in its report last Friday noted that Tune Protect’s recent tie-up with Baoviet Insurance and Vietjet Air will also further boost the company’s income from the travel segment and expand its regional exposure.
Reiterating its “buy” recommendation on Tune Protect, TA Research kept its target price for the counter unchanged at 50 sen based on 0.7 times forward price-to-book value.
This represented a potential upside of about 27% over the counter’s closing of 39.5 sen last Friday. Year-to-date, Tune Protect’s shares had risen by about 25%.
TA Research said it was confident that Tune Protect’s 2Q23 earnings performance would improve on a quarter-on-quarter basis.
It also said it expected Vietjet to be Tune Protect’s second-largest travel insurance revenue contributor after AirAsia group.
“Assuming a take-up rate of 6% for Vietjet, we estimate an additional RM15.2mil, or 3.5%, to Tune Protect’s gross written premiums in 2023,” TA Research said.
“Overall, we forecast the Tune Protect travel insurance segment to grow by 27.9% to RM133mil in 2023, driven by the reopening of borders in China and repricing activities,” it added.
TA Research noted that Vietjet carried 5.4 million passengers, as compared to 13.7 million passengers carried by Capital A Bhd and AirAsia X Bhd in 1Q23.
Overall, the brokerage said it was optimistic about Tune Protect’s recent partnership with Baoviet Insurance and Vietjet Air, which went live with the sale of travel insurance within Vietjet Air’s travel portal on July 5.
“We are optimistic about the news as this will boost Tune Protect’s travel business and expand its Asean exposure,” it said, noting that Vietjet operates around 400 flights daily, with 113 routes covering destinations across Vietnam, Japan, Hong Kong, Singapore, South Korea, Taiwan, China, Thailand, Myanmar, Malaysia and Cambodia.
“We understand that Tune Protect has been chosen due to its strength in travel, technology, capability and experience.
“This partnership marks Vietjet Air as Tune Protect’s seventh airline partner, joining the ranks of AirAsia, AirAsia X, Bamboo Airways, SalamAir, AirArabia and FlyArna,” it added.
Meanwhile, TA Research had earlier highlighted that Tune Protect had recently increased AirAsia travel premiums for Malaysia, Thailand and Vietnam by 5% for domestic and 10% for international routes.
The brokerage estimated that these increases would boost Tune Protect’s 2023 bottom line by about RM3mil to RM4mil.
Tune Protect posted a net profit of RM1.97mil on revenue of RM121.83mil for 1Q23, as compared to a net loss of RM2.33mil on revenue of RM102.92mil in 1Q22.
