KUCHING: Despite Tune Protect Group Bhd’s (Tune Protect) first quarter of financial year 2017 (1QFY17) results coming in below the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) estimates, optimism remains for the group.
In a statement on Bursa Malaysia, Tune Protect highlighted that the group posted a lower profit after tax at RM13.4 million, down 44.9 per cent year on year for 1Q of 2017 (1Q17), compared to 1Q16.
Tune Protect’s profit after tax and minority interest (PATAMI) of RM13.4 million came in below MIDF Research’s and consensus’ expectations at 13.8 per cent and 15.5 per cent of full year estimates respectively.
Although the results came in below its expectations, MIDF Researsch believed that Tune Protect will be able to rebound in the coming quarters.
“This is premised on our expectation that travel insurance take-up rate for AirAsia airlines will recover due to the new initiatives and on-going strategy to be implemented this year,” it said.
Moving forward, MIDF Research highlighted that according to management, Tune Protect will embark on a strategic collaboration with AirAsia on digital side which will act as a catalyst to drive their digital transformation program.
The research arm opined this development as a step in the right direction for Tune Protect to address the decline in the group’s Global Travel Insurance business as well as to deliver further growth.
Overall, MIDF Research maintained its ‘buy’ stance on Tune Protect with an unchanged target price of RM2.18 per share based on FY17 sum-of-parts valuation.
The research arm’s positive view was on the back of the group’s various ongoing initiatives for product innovation, customer oriented and channel and undemanding valuation of price to book value (PBV) and price earnings ratio (PER) of 2.6-fold and 12.5-fold.