Timeless investment advice

Author: warchest   |   Latest post: Sun, 23 Aug 2020, 6:23 AM


Tune Protect Group: Wishlist, can it be fulfilled?

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I had gone extra miles to gather the concerns, frustrations, exasperations from the shareholders of Tune and summarised into a wishlist below. Hope the Board of Directors of Tune would consider this wishlist in the coming AGM on 4 August 2020
  1. "A leader should be visionary" - Unfortunately, Tune is the abandoned child of Tune Group. Its visionary founders were not there to see their ideas being implemented properly by their team since the IPO. Jack Ma while growing its bread and butter, Alibaba's e-commerce business managed to turn Ant Financial into the biggest fintech company in the world with a valuation of USD200 bil. That's what I called as a real visionary founder. Hope this time, the visionary founders will put more effort to grow it into a scalable insurance company. 


  1. "Great companies are built on great products" - Elon Musk. Great products were created by understanding on the issues faced by consumers everyday. Great insurance products sell themselves. Does Tune even have great products and product development team? Develop products and solutions that can reach consumers especially millennials easily. Make it a no-brainer deal when it is bundled with AirAsia flights.


  1. "Numbers can be misinterpreted, but they don't lie" - Numbers don't lie. Its financials were deteriorating from FY15 to FY19 in terms of ROE (from 15.3% to 9.1%), NEP (from RM304 mil to RM255 mil) but its management expenses grew exponentially from RM82 mil to RM120 mil. Its combined ratio increased from 86% to 96, meaning it has a slim underwriting profit.


  1. "Never spend your money before you have earned it" - Ridiculous management expenses of 47% of Net Earned Premiums in FY19 as compared to 27% in FY15. And what is the breakdown of digitalisation spending since FY15 and its efficacy to turn it into a leading digital insurer in Malaysia.


  1. "Screw it, let's do it" - Richard Branson. Intervene on the business model, distribution channels, cut fat and be leaner. Cut, slash and melt it. Always remember Tune is not performing compared to its peers, so act fast. Just do it!


  1. "Do you know the only thing that gives me pleasure? It's to see my dividends coming" - John D. Rockefeller. No dividends been paid for FY19 despite there is a dividend payout ratio of 40%. It certainly gives displeasure to the shareholders especially with 80% plunged in stock prices and deterioration in financials.


  1. "You need the right people with you, not the best people" - Jack Ma. Staff costs increased significantly since the IPO but businesses were not growing. The last 3 CEOs resigned within the last 5 years and it has impeded the growth of Tune.


  1. "Don't put all your eggs in a basket" - Find a holistic, diversified approach. Don't just rely on travel insurance plan and AirAsia ecosystem. Face a harsh reality that global travel is facing a crisis now.


  1. "Insurance float has worked in Berkshire's favor" - Warren buffet. But not in Tune case. Insurance float has increased significantly from RM665 mil in FY15 to RM862 mil in FY19 but investment income only grew from RM27 mil to RM31 mil. Revisit Tune's investment mandate as it is only earning 3.6% investment return on its float.


  1. "Marketing is telling the world you're rock star" - Marketing is all about creating demand for its products. But the demand is not growing or worst off, no increased demand despite RM18.3 mil being spent on marketing and publicity expenses for FY19.


  1. Lastly, a quote by Jeff Bezos "If you can't tolerate critics, don't do anything new or interesting". Do what it works. Concentrate on your core competencies. Don't do it for the sake of doing. Prepare to listen to critics and transform. Make it as a unprecedented one for the coming Tune's AGM on 8 August 2020 and don't dodge again on the questions by the shareholders.


Year 2020 is a year of reflection for Tune and hopefully by 2021 Tune can rebound strongly. But it doesn't come easy. A lot of works need to be done.


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  2 people like this.
zhen wei & JP Great. Thank you.
29/07/2020 10:19 AM

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