Tune Protect Group Bhd is probably a counter for investors eyeing short term play. It appears the counter is back on an upward trend after surpassing its 10-month primary resistance at 37.5 sen to close at 38 sen on July 5.

This suggests reversal of primary downtrend and the start of primary uptrend. The stock could potentially test the resistance at 43 sen and 46.5 sen respectively. Tune Protect touched a 52-week high of 47 sen in Aug last year but plunged to a low of 31 sen in April. As the counter came off its year high, it is not surprising for investors to buy on the current weakness.

Fundamentally, investors could be wary of its ability to maintain profitability although some analysts believe Tune Protect should be able to return to the black this year. Tune Protect went into the red with a core net loss of RM3.5 million in 1Q24 from a profit of RM2 million a year ago due to a higher combined ratio of 14.5 pts to 109.8%.

In terms of YTD share price performance, Tune Protect fell 20.0%, underperforming the KLCI index. Analysts are not positive on the insurance sector, given its defensive qualities. Dividend remains decent, with forward yields at 4.9% to 6.1% in FY25.

However, analysts are positive on Tune Protect, as it is backed by promising growth in the air travel sector as demand for air travel continues to surge and airlines are expanding their routes and capacity. . As it is, Malaysia recorded 20.1 million foreign tourist arrivals last year, with Singaporeans making up the bulk of the number with 8.3 million.

Meanwhile, the country saw 3.1 million Indonesian articts, Thailand (1.55 million) and China (1.47 million). A target of 27.3 million foreign tourists has been set for 2024.

The travel segment,is buoyed by the 30-day visa-free arrangement for Chinese and Indian visitors to Malaysia. Moreover, international travel ended 2023 at 88% of prepandemic levels and is expected to surpass the pre-pandemic level in 2024. With that, Tune Protect will benefit from the higher demand for travel as travel makes up about one-third of its revenue.

This belief is further strengthened by the fact that the group’s key partners, AirAsia Group and AAX Group, are expected to expand their operational aircraft by 8% to 249 by the end of 2024.