Review

• Tune Protect Group Berhad's FY23 core net profit of RM21.5mn came in within our expectations at 102.6%.

• QoQ, insurance revenue declined by 59.7% to RM43.1mn, leading to a LBT of RM22.6mn (vs. PBT of RM9.0mn in 3Q23). We attribute the weaker performance to the one-off adverse impact of non-redemption of Perlindungan Tenang Voucher (PTV) amounting to RM43.6mn (insurance revenue) and RM29.5mn (PBT level). The group shared that some of the policies underwritten by Tune Protect will not be eligible for redemption as some customer consents secured have been assessed as unacceptable by the regulator.

• Excluding the one-off PTV impairment, FY23 core net profit stood at RM21.5mn (vs. net loss of RM35.1mn in FY22). Meanwhile, combined ratio decreased by 4.9 pts to 102.7% in FY23 (vs. 95.3% if exclude PTV impact).

• 4Q23 net written premiums (NWP) grew 8.3% YoY to RM85mn, boosted by motor and travel business. Motor NWP grew 75% YoY, led by intermediaries and partnerships channel growth. As for travel, NWP increased 14% YoY, driven mainly by AirAsia, VietJet and Air Arabia.

Impact

• No change to our earnings forecasts.

Outlook

• We expect travel segment to continue to improve in 2024 as the group will benefit from rising travel demand to China and Malaysia. In addition, we believe airline companies would continue adding capacity to the market, which would bode well for Tune Protect.

• For motor segment, we opined that growth momentum will continue via repricing activities and various strategic tie-ups with partners.

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 - 1 Mar 2024