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Wednesday, December 14, 2016

Tunepro: Earning Dropped Sequentially

Results Update

For QE30/9/2016, Tunepro's net profit dropped by 46% q-o-q but rose 11% y-o-y to RM14 million while revenue rose less than 1% q-o-q or 4% y-o-y to RM126 million. Revenue rose by RM0.6 million q-o-q due to increase of RM3.1 million in GEP offset by decrease in investment income of RM2.5 million. PBT declined by RM18.5 million q-o-q due to a drop in pre-tax profits in general insurance of RM16.9 million; RM1.1 million in investment holding segment; and RM0.5 million in share of profits of associates. The drop in pre-tax profits in general insurance was in turn due to reduced share of results from Malaysian Motor Insurance Pool (MMIP) of RM15.6 million and increase in management expenses of RM1.3 million. [Note: Tunepro's result for QE30/9/2016 was released on November 25.]


Table: Tunepro's last 8 quarterly results


Graph 1: Tunepro's last 20 quarterly results

Tunepro's revenue continued to track the revenue of Airasia. Thus, its performance will continue to be healthy as Airasia expands its wings across Asia.


Graph 2: Tunepro & Airasia's last 20 quarterly revenue
 
Valuation

Tunepro (closed at RM1.37 yesterday) is now trading at a PER of 11.9 times (based on last 4 quarters' EPS of 11.56 sen). At this PER, Tunepro is deemed attractively valued.

Technical Outlook

Tunepro broke below the uptrend line, SS at RM1.60 about 4 weeks ago. Last Froday, it broke below the support from the horizontal line at RM1.45. Its next support will come from the hroizonatl line at RM1.20.


Chart: Tunepro's weekly chart as at Dec 13, 2016_3.30pm (Source: Chartnexus) 

Conclusion

Despite weaker financial performance and negative technical outlook, Tunepro remains a good stock for long-term investment.  

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

4 comments:

panaceaasia said...

Tune Pro's financial performance has been choppy. The business is conceptually attractive but as with many components of AirAsia group, the execution is poor.

Alex Lu said...

Hi panaceaasia

Agreed. Tunepro's bottom-line has been choppy, especially the last quarter. It plunged from a new PBT high of RM35 million to the low of RM15 million. In some way, this choppiness explains the disappointment of investors in the stock.

lai said...

Value trap stock or just have a habit of changing CEO?

Alex Lu said...

Hi lai,

Tunepro cannot be a value trap. It's about execution or failure to get it right. If you have the money, you can hire the best people to get it right. Let's see...