Review

• Tune Protect Group Berhad's 9M23 net profit of RM15.2mn came in within our and consensus expectations at 72.9% and 77.0% respectively.

• 9M23 PBT stood at RM25.8mn (vs. LBT of RM38.2mn in 9M22). The better performance was driven by: i) an increase of RM33.7mn in investment income, ii) turnaround in share of profits of an associate and iii) lower operating expenses.

• The group recorded a 4th consecutive quarter of profitability on the back of better investment performance and improved combined ratio (95.2% in 3Q23 vs. 100.5% in 3Q22). Note that 3Q23 revenue declined 15.3% YoY to RM106.9mn due to decision to gradually exit from commercial books.

• QoQ, 3Q23 PBT decreased by 30.3% to RM9.0mn despite higher revenue of 4.5% to RM106.9mn. We attribute the weaker result to lower investment income and share of profits of an associate.

Impact

• No change to our FY23-25 earnings forecasts.

Outlook

• With year-end travel peak season approaching, we expect 4Q23 performance to improve. In addition, the motor segment is expected to continue to deliver growth following the repricing activities.

• We are optimistic on the group’s plan to expand its ASEAN presence in Indonesia, India, Japan and South Korea by 1Q24. Recall that Vietnam is becoming a major contributor to Tune Protect top-line (15% of GWP in 3Q23).

Valuation

• We maintain our Buy recommendation on the stock with an unchanged TP of RM0.51/share based on 0.7x CY24 PB.

Source: TA Research - 24 Nov 2023