INVESTMENT HIGHLIGHTS

• Global expansion into key emerging markets likely to start yielding results, especially for its non-Air Asia segment

• Leveraging insurtech capabilities to maximise value of the gap between online and offline endeavours

• Digital assets consolidation under a new entity to focus on unlocking the fee income potential in the insurance space

• Profitability in the general insurance segment to improve via focusing on selected higher margin products in the non-motor segments

• These initiatives likely bear fruits in terms of top and bottom line with a single digit growth rate in FY19

• Maintain BUY with unchanged TP of RM0.87

A renewed aspiration. We met with the new Tune Protect’s Group (TPG) CEO recently, Khoo Ai Lin, along with its senior management team to discuss on its strategies for growth. TPG targets ambitiously 43 million policies sales in 3 years from current 10 million policies sold in FY18. The key transformational initiatives are: (1) Expanding its reach into new markets starting with travel insurance; (2) Generating additional revenue stream through fee income; (3) Consolidating insurtech capabilities and other digital assets into a new entity to allow for efficiency and speed; (4) Focus on the selected higher margin products in the non-motor segments.

Progress of overseas expansion plan. In 1QFY19, Tune Protect (TPG) has tied up with PT Asuransi Buana Independent (ABI), an insurance provider in Indonesia and also with Association Indonesian Tours and Travel Agencies (ASITA) East Java in Surabaya which has about circa 21 branches nationwide and 700 travel agencies respectively. The exclusive two-year partnership with ABI will enable TPG to tap into local travel insurance space more efficiently via an online portal powered by TPG called ‘AyoBerasuransi’. The partnership is based on 30:70 quota share between ABI and TPG respectively. TPG has also signed up around circa 40 ASITA travel agents thus far to offer travel protection via ABI. This deal is expected to bring in collectively USD350k worth of travel insurance premiums for the first year.

Source: MIDF Research - 19 Apr 2019