Tuneins is a good company, but i think it is too pricey. NTA 48sen and pays no dividend but share price trading at about 4x NTA. Only good thing is its ROE is quite high 19.
Don't think it will go up in the 1H of FY14. 19% of Tune's revenue is from Thailand. Short term wise, 1st and 2nd qtr results might be hit due to political unrest in Thailand.
The big questions are whether Tune Ins underwrite insurance to cover Mas air passengers? If Tune Ins does cover Mas passengers insurance, then surely TI will be affected. let's hope for the best to all MAS plane passengers .
Maintain OVERWEIGHT. We remain OVERWEIGHT on the sector, but are more selective on quality insurers. For investors seeking value, we have a BUY on Syarikat Takaful Malaysia (STMB MK, BUY, FV: MYR13.10) - a proxy to the takaful sector that has been outperforming the takaful industry. We also have a BUY on Tune Ins Holdings (TIH MK, BUY, FV: MYR2.40), which we view as a growth stock with high earnings growth potential, riding on margin boost and regional expansion of its travel insurance business -RHB-
New catalyst No. 1 Entry into Middle East On 20 Jan 14, Tune Ins entered into a joint venture agreement with Cozmo Travel LLC (CT) to distribute travel insurance products. Subsequently, the JV company was registered with the Department of Economic Development of Dubai on 12 Mar 14. Tune Ins has a 49% stake in the company with the remaining 51% held by Cozmo. As stated in an article that appeared in The Edge over the weekend, the above JV will also give Tune Ins access to air travellers not only in the Middle East but also Europe and even North Africa. We understand that the key top management staff of the travel insurance unit has been working closely with Cozmo to prepare for the commencement of the JV in 2H14. As the booking of tickets in Dubai will still be done mainly through agents, Tune Ins’s strategy in the Middle East is somewhat different as it will focus on developing a system that could be placed in the agents’ offices for them to purchase travel insurance for clients. The above comes as a “bonus” for the company as it did not plan for the JV when it launched its IPO last year. Tune Ins was referred to Cozmo by one of its shareholders who likes the former's business model and capabilities in the travel insurance business. About Cozmo The company was launched in Jan 10, offering customised travel solutions to both independent and corporate travellers. Its services include travel planning, ticketing services, hotel bookings, visa processing as well as organising activities such as excursions and safaris. Cozmo Travel kicked off its operations as a full-fledged IATA-certified (International Air Transportation Association) travel agency on 26 May 10 in Sharjah. It has a total of 12 branches operating out of the UAE. The company also has outlets in Doha and Riyadh. Its operations have expanded to other countries, including Saudi Arabia, Kuwait and Bahrain.
Benefits of the tie-up The JV will benefit Tune Ins in the following manner: A new stream of revenue Diversifying away from AirAsia A maiden venture into Middle Eastern markets The contributions from this JV may be small compared to those from AirAsia as (1) AirAsia is one of the leading low-cost carriers in Asia, (2) Tune Ins only owns 49% of the JV company, and (3) the commission rate in Middle East is higher at 50-70% compared to 25-30% in other countries. However, the JV should be earnings-enhancing due to the low start-up costs relative to the revenue.
New catalyst No. 2 Planting the flag in Thailand On 4 Apr 14, the Office of Insurance Commission Thailand gave the approval for Tune Ins to hold up to 49% in Osotspa Insurance Public Company Limited (OI). We understand from management that all parties will sign the agreement for the deal within 1-2 weeks, with Tune Ins acquiring a 49% stake in OI. Its another partner will acquire 25% of OI, with the 26% interest remaining in the hands of the existing shareholders. The 49% stake will cost Tune Ins about US$10m.
The new products for TIM include snatch-theft insurance, employer-liability insurance and cheaper-cost life insurance (for its tie-up with a life insurance company).
Lifting earnings forecasts and target price We are raising our EPS forecasts by 1.6% for FY14 and about 4% for FY15-16 to factor in the two corporate exercises, as follows: Factoring in the tie-up with Cozmo increases our net profit forecasts by 1-2.4%, based on the assumptions of a rise of 5-11% for gross premium and 10-20% for the travel insurance business's operating costs. As we factor in the proposed acquisition of Osotspa in Thailand, our net profit forecast for FY14 increases by 0.7% and that for FY15-16 rises 1.6%. This is based on the assumptions of (1) 15% of its travel insurance premium generated in Thailand, (2) a 70:30 sharing of the premium in Thailand for Tune Ins and its partner, (3) 50% net profit margin, and (4) Tune Ins acquiring a 49% stake in Osotspa. The higher EPS forecasts also cause our target price to increase from RM2.55 to RM2.71.
APPENDIX Information on Osotspa Insurance Fire – perils of fire, lightning, earthquake, explosion hazards due to water-based vehicles and aircraft disasters (not including flood) Expanded coverage – temporary housing Addition of coverage for natural disasters – flood, hurricane, windstorm and hail – with a combined liability of THB100,000 Addition of coverage for flood, hurricane and tsunami, with a combined liability of not more than THB100,000 Compulsory motor insurance – Victims Insurance Protection Act of 2535 requires all types of automotive vehicles registered with the Department of Transport to be insured for deaths and physical injuries of the drivers/passengers. The insurance also has third-party coverage. Medical expenses not exceeding THB50,000 per person, in case of injuries An amount of THB200,000 per person for death and permanent disability The total claims shall not exceed THB204,000 per person Voluntary motor insurance Insurance Type 1 (most comprehensive coverage) Own and third-party vehicles or property coverage Coverage of losses from fire on the motor vehicles Addition premium for riders to cover insurance for personal accidents, medical costs and bail expenses in criminal cases Policy Type 2 (Class 2) Coverage includes (1) bodily injuries of the passengers and third party, (2) damages to third party’s property, and (3) fire on the insured vehicle Policy Type 2 + 2 Plus
Coverage includes (1) bodily injuries of the third party, (2) damages to third party’s property, (3) fire on the insured vehicle, and (4) damages to the insured vehicle during an accident Policy Type 3 Only covers third parties, including the loss of life, bodily injuries as well as damages to the property of the third party. Policy Type 3 + 3 Plus Coverage includes the loss of life and bodily injuries for a third party, damages to the property of a third party as well as damages to the insured vehicles during an accident Marine and transportation (cargo) Coverage for loss or damage of goods while in transit, through the means of ships, airlines, cars and trains or by mail. Personal accident (PA) – provides 24-hour coverage everywhere around the world, whether the policyholders are at work, at home and travelling. Cancer insurance Insurance risks Legal liability insurance Insurance for SMEs
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
WDragon
135 posts
Posted by WDragon > 2014-02-26 06:37 | Report Abuse
I think somebody to accumulate the share. If not, why a lot of trade between 1.80-1.85.