TUNEINS (5230) : Tune Ins Holdings Bhd - Tuning up for explosive growth in Thailand
Target RM3.05 (Stock Rating: ADD)
Apart from its travel insurance business, the growth prospects for the Thai non-life insurance (NLI) sector is another strong re-rating catalyst for Tune. Thailand NLI premiums are expected to expand at a sustainable rate of 13-14% in the next 3-5 years vs. 8-9% in Malaysia. To reflect the positive outlook for in Thailand, we raise our FY15-16 EPS forecasts and our DDM-based target price (COE of 9.2%; LT growth of 5%). We reiterate our Add call on Tune, based on the rapidly-expanding travel insurance business and its growth prospects in Thailand.
To reflect the positive outlook for in Thailand, we raise our FY15-16 EPS forecasts and our DDM-based target price (COE of 9.2%; LT growth of 5%). We reiterate our Add call on Tune, based on the rapidly-expanding travel insurance business and its growth prospects in Thailand.
Sustainable NLI premium growth of 13-14%
Our recent meetings with the Office of Insurance Commission (OIC), the Thai insurance regulator, and two insurance companies reaffirmed our positive stance on Tune Ins’s 49%-owned associate in Thailand, Tune Insurance PCL (TIPCL). The OIC guides for strong, sustainable premium growth of 13-14% for the NLI sector in Thailand. We think that this is achievable, given: 1) the country’s huge population of 67m, 2) the under-penetrated NLI sector, and 3) the business opportunities presented by the neighbouring countries.
Explosive growth for TIPCL
While we estimate that the industry’s earnings will expand at 13-14% in the next 3-5 years, TIPCL’s earnings growth is likely to be much stronger, at 20-50%. This is because of: 1) its smaller base, and 2) Tune Ins’s aggressive strategies to drive earnings growth in Thailand.
Strategic thrusts for TIPCL
We believe that TIPCL will focus on six strategic thrusts to boost its earnings: 1) exploiting digital channels, 2) tapping on Osotspa Co Ltd’s ecosystem, 3) referrals for corporate businesses, 4) collaboration with big companies, 5) more tie-ups with other airlines, and 6) capitalising on the relationship with AirAsia/Tune group.
Global ambitions
The expansion in Asia in the past five years is just the beginning for Tune as its ultimate goal is to expand Tune Insurance into a global brand. Management sees Thailand as the best place to start its penetration into Western markets, as it is the country in Asia that attracts the most visitors from Europe and the US.
Source: CIMB Daybreak - 13 November 2014
Target RM3.05 (Stock Rating: ADD)
Apart from its travel insurance business, the growth prospects for the Thai non-life insurance (NLI) sector is another strong re-rating catalyst for Tune. Thailand NLI premiums are expected to expand at a sustainable rate of 13-14% in the next 3-5 years vs. 8-9% in Malaysia. To reflect the positive outlook for in Thailand, we raise our FY15-16 EPS forecasts and our DDM-based target price (COE of 9.2%; LT growth of 5%). We reiterate our Add call on Tune, based on the rapidly-expanding travel insurance business and its growth prospects in Thailand.
To reflect the positive outlook for in Thailand, we raise our FY15-16 EPS forecasts and our DDM-based target price (COE of 9.2%; LT growth of 5%). We reiterate our Add call on Tune, based on the rapidly-expanding travel insurance business and its growth prospects in Thailand.
Sustainable NLI premium growth of 13-14%
Our recent meetings with the Office of Insurance Commission (OIC), the Thai insurance regulator, and two insurance companies reaffirmed our positive stance on Tune Ins’s 49%-owned associate in Thailand, Tune Insurance PCL (TIPCL). The OIC guides for strong, sustainable premium growth of 13-14% for the NLI sector in Thailand. We think that this is achievable, given: 1) the country’s huge population of 67m, 2) the under-penetrated NLI sector, and 3) the business opportunities presented by the neighbouring countries.
Explosive growth for TIPCL
While we estimate that the industry’s earnings will expand at 13-14% in the next 3-5 years, TIPCL’s earnings growth is likely to be much stronger, at 20-50%. This is because of: 1) its smaller base, and 2) Tune Ins’s aggressive strategies to drive earnings growth in Thailand.
Strategic thrusts for TIPCL
We believe that TIPCL will focus on six strategic thrusts to boost its earnings: 1) exploiting digital channels, 2) tapping on Osotspa Co Ltd’s ecosystem, 3) referrals for corporate businesses, 4) collaboration with big companies, 5) more tie-ups with other airlines, and 6) capitalising on the relationship with AirAsia/Tune group.
Global ambitions
The expansion in Asia in the past five years is just the beginning for Tune as its ultimate goal is to expand Tune Insurance into a global brand. Management sees Thailand as the best place to start its penetration into Western markets, as it is the country in Asia that attracts the most visitors from Europe and the US.
Source: CIMB Daybreak - 13 November 2014
