• Aleader in digital insurance. TUNEPRO (listed in Feb 2013) is mainly involved in the provision of various general and life insurance products in Asia Pacific. The company offers a range of online insurance products, including travel, lifestyle protection, and guest personal accident insurance products. The group currently captures a strong niche in the travel insurance segment, riding on its sister company, AIRASIA and AAX low cost carrier’s network expansion and strong passenger growth.
• Its recent establishment of the retakaful window will provide the Company with an opportunity to accelerate growth in penetrating ASEAN’s travel retakaful sector, expand reach via partnerships with takaful underwriters worldwide and offer direct and digital retail retakaful solution.

• A good proxy to Air Asia. Given that TUNEPRO’s income is mainly derived from travel insurance segment (highly correlated to the passenger growth of its sister companies, AirAsia Group), it could serve as an alternative investment vehicle for investors who wish to participate in AirAsia’s strong growth story without exposures to jet fuel price and US$ borrowings risks.

• Measures to rejuvenate earnings. The travel insurance premium was down 4.1% in FY16 due to the switch to an “opt-in” function (whereby customers will have to select the option for the purchase of insurance on AirAsia’s website, instead of it having been pre-selected previously). To address the decline in premiums, the company plans to launch the bundling of its travel insurance products with AirAsia tickets in the 2Q17. If this materialises, it would rejuvenate the growth in the travel insurance premium. Furthermore, the management plans to conclude the EPS accretive acquisition in Indonesia this year
• Undemanding valuations. TUNEPRO corrected 17.4% from a 52-week high of RM1.72 on 25 Jul to end at RM1.42 yesterday. Currently, the stock is trading at 10.7x FY18 P/E and 2.15x P/B, which are 37% below its historical average (since debut) of 17x and 35% below its historical P/B of 3.3x, respectively, supported by decent yields of 3.5-4.2% and 12% earnings CAGR for FY16-18 and reinforced by the strong passenger growth from AIRASIA.
• On the verge of a triangle breakout. TUNEPRO has rebounded from YTD low of RM1.277 to RM1.47 (3, 4 and 5 April high) before closing at RM1.42 yesterday, building its base above the 50-d SMA or RM1.38 levels. After a brief sideways consolidation, we expect the stock to stage an imminent triangle breakout above immediate resistance of RM1.47 and RM1.51 (weekly downtrend channel and 200-d SMA) before reaching our LT objective of RM1.63 (150-w SMA). Key supports are at RM1. 38-1.40. Cut loss at RM1.35

Source: Hong Leong Investment Bank Research - 5 May 2017