KUCHING: Tune Protect Group Bhd’s (Tune Protect) first nine months of financial year 2015 (9MFY15) earnings has met analysts’ expectations, resulting in unchanged FY15 and FY16 earnings forecasts.
In a press release on Bursa Malaysia, Tune Protect said that over 9M, profit after tax came in at RM47.7 million, an 8.2 per cent decrease over the same period last year – mainly due to higher management expenses which include higher royalty fees related to the use of the Tune trademark and cost of rebranding, as well as the one-time sale of building in 2014.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), after stripping out one-off gain of RM4.3 million from sale of building in 9MFY14, the normalized earnings in 9MFY15 saw a flat on-year growth.
Overall, core cumulative earnings of RM45.5 million came in within MIDF Research’s expectation at 74 per cent of the research arm’s full-year estimate but below street estimate at only 58 per cent.
Premised on above, MIDF Research maintained its FY15 and FY16 earnings forecasts.
Hence, MIDF Research reiterated its ‘buy’ stance with an unchanged target price of RM1.86 per share.
The research arm noted that key catalysts for the earnings growth of 12.9 per cent year on year (y-o-y) next year will be as following rising air travel demand growth which is expected to increase the purchase of travel insurance, regional exposure via partnerships with airlines such as AirAsia, Cebu Pacific and Air Arabia as well as established arrangements with local insurance partners across the region and new investment opportunities though overseas ventures.
Meanwhile, it underlined that the downside risks include further economic slowdown will pose an adverse impact on the group’s travel insurance business as consumers’ spending on air travel is discretionary and strain on capital position in the event of higher insurance claims.