KUALA LUMPUR (Nov 16): Tune Protect Group Bhd, formerly Tune Ins Holdings Bhd, posted a 20.44% year-on-year (y-o-y) drop in its net profit for the third quarter ended Sept 30, 2015 (3QFY15) to RM12.86 million from RM16.17 million, mainly due to higher management expenses and a one-off rebranding spend.
Its revenue for the quarter, on the other hand, rose 10.53% y-o-y to RM121.05 million, Tune’s filing with Bursa Malaysia today showed.
“In light of the softer economic outlook and ongoing geo-political circumstances, the group posted respectable, double-digit growth with strong contribution mainly from our Global Travel business.
“This year, we incurred higher management expenses due to higher royalty fees in the licensing of the Tune trademark, which was partially deferred to this year, and a one-time Tune Protect rebranding spend,” said Tune’s chief executive officer Junior Cho.
Cho added that there was an 11.7% growth in Tune’s Global Travel business for the nine-month period (9MFY15), while its Malaysia’s general insurance business jumped by 38.9% in the same period — after taking out the one-time gain from selling its former headquarters on Jalan Ampang last year.
For 9MFY15, Tune’s net profit came to RM45.49 million or 6.05 sen a share, 8.59% lower than the previous corresponding period’s RM49.76 million or 6.62 sen a share. Revenue, however, climbed by 6.95% to RM347.55 million.
Cho said its Global Travel business’ growth came because of “healthy travel demand, despite recent regional events ranging from Bangkok bombings, Bali volcanic activity, and prolonged haze conditions in Malaysia, Singapore and Indonesia”.
He is banking on Global Travel business’ growth for the remainder of 2015, even when taking 2016’s slower economic growth forecast into the equation.
“We see increased travel demand as we enter the last quarter of 2015 and with our continued education marketing and take-up rate initiatives, we hope to increase awareness in the value of travel insurance and capitalise on the peak travel season,” Cho added.
“In addition, we will continue our rollout into travel agencies until mid-2016 to further extend our product offerings to customers who prefer doing travel bookings through offline channels,” he said.
However, he conceded that the general insurance industry might face slower growth because of the uncertainty in the macroeconomic landscape.
“While Tune Insurance Malaysia Bhd (Tune’s Malaysia general insurance business) will face similar headwinds, it is our expectation that its growth should outpace the industry average for the remainder of the year,” he added.
Tune, part of the AirAsia Group of companies, closed flat today at RM1.47 after hitting a low of RM1.45 earlier, giving it a market capitalisation of RM1.11 billion.
(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
Source: theedgemarkets.com; 16 November 2015