We  continue  to  envision  unimpeded  growth  in  Tune  Ins’  travel insurance,  and  reaffirm  a  strong  4Q  travel  season,  supported  by  4Q data released  by the airline partners.  Maintain  BUY,  with a MYR3.00  TP(24x  FY15F  P/E,  63%  upside).  Tune  Ins  remains  an  attractive  growth stock  given  its  ongoing  global  growth  and  transformation,  away  from 2014’s slowdown in regional tourism and hiccups in local business.

We  expect  commendable  4Q14  travel  insurance  results  (4Q13: MYR29m), assuming a 26-32% take-up rate.  Data released by its airline partners  reaffirm management’s expectations of a seasonally strong 4Q season.  In  terms  of  passenger  QoQ/YoY  growth,  AirAsia  (AIRA  MK, BUY, TP: MYR3.39) recorded  12%/2%, with: i) AirAsia Indonesia (4%/-11%), ii) AirAsia Thailand (20%/16%), iii) AirAsia Malaysia (12%/0%), iv) AirAsia Philippines (-4%/-24%), and v) AirAsia X (AAX MK, NEUTRAL, TP:  MYR0.61)  (4%/12%).  The  other  airline  partners  also  recorded impressive FY14 growth, with Cebu Pacific (CEB PM, NR)  experiencingan  18%  growth  YoY  for  domestic/  international  passengers,  while  Air Arabia carried 6.8m passengers representing an  11% growth YoY.  The total passengers  made up  102%  of our 50m  passengers  assumption  -which  should  directly  benefit  the  company’s  earned  premium  growth  -despite a weak regional travel demand in 2014. We expect both existing partners’  growth and potential new partnerships to support 60m FY15F passengers assumption.

Forecast  and outlook  retained.  Tune Ins is  expected to report results by end-February. We expect 4Q  to be robust due to  the aforementioned seasonality,  full contributions from the Middle East  JV  and its Thailand associate.  This  should  offset  a  low  take-up  rate  in  3Q14,  which  was hampered by a rationalisation in airline capacity and one-off issues with online  booking  engine.  Our  outlook  remains  bullish  as  we  think  a recovery  in  regional  travel  demand  is  unfolding.  Thailand  is  already experiencing  an  18% YoY growth in international arrivals in Feb 2015, owing to an improved political climate and the Spring festival season.

Maintain  BUY,  TP  MYR3.00  at  24x  P/E  –  a  premium  to  sector valuations  of  14-20x,  implying  approximately  16%  3-year  forward earnings  CAGR  vs  the  sector’s  13%.  Tune  Ins  is  a  growth  stock  with valuations supported by a swift global expansion and more  partnerships with airlines, travel providers and e-commerce players. This is in contrastto  other  insurance  stocks  which  are  mostly  targeting   growth  in  a domestic, competitive environment.  Diversification away from AirAsia is pivotal to support our call. Other risks may include uptick in expenses as Tune Ins realigns its business to consumer (B2C) focus and sharpens its multiplatform capabilities.