Sunday, December 1, 2013

Tune Ins - Travel unit takes flight (CIMB)

Tune Ins Holdings Bhd -
Current RM1.90
Target RM2.55
Travel unit takes flight

At 76% of our full-year forecast and 75% of consensus, Tune Ins's 9M13 net profit topped expectations. The variance came from a surprisingly low tax rate of 5.5%, partly arising from RM2.7m tax relief from the payment to the Malaysian Motor Insurance Pool (MMIP). We are raising our FY13 EPS forecast by 4% as we lower our assumed tax rate from 22% to 19%. This does not affect our DDM-based target price (9.2% COE; 5% LT growth). We retain our Outperform call due to the catalysts of swift expansion of the travel insurance business and an EPS-accretive acquisition in Indonesia.


We are raising our FY13 EPS forecast by 4% as we lower our assumed tax rate from 22% to 19%. This does not affect our DDM-based target price (9.2% COE; 5% LT growth). We retain our Outperform call due to the catalysts of swift expansion of the travel insurance business and an EPS-accretive acquisition in Indonesia.

Banking on TI
We are positive on the jump in the growth in the travel insurance (TI) business. This unit posted a 45.2% yoy surge in 9M13 revenue and a 40.5% jump in pretax profit. Tune Ins's overall 9M pretax growth was even stronger, at 64.6% yoy with the inclusion of the earnings from the general insurance unit in Malaysia, which was acquired on 23 May 12. For this reason, the revenue of the general insurance (GI) business shot up by 174% yoy in 9M13. The GI revenue was also partly lifted by its takeover of some of the TI business in Malaysia.

Most earnings from TI
In 9M13, the revenue from the TI segment (including inter-segment revenue) accounted for only 22.2% of the group's topline. However, it was the biggest contributor to net profit, at 58.3%. This was mainly due to its high pretax margin of 51.8% compared to only 9.1% for the non-life unit in Malaysia, which was weighed down by a high claims ratio.

Pushing for growth
Stay invested in Tune given its bright earnings prospects, emanating from the rapid growth of its TI business in the region and the proposed entry into Indonesia. Another catalyst is tie-ups with other airlines, which will provide another revenue source for its TI business.



Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 19/11/13

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