Tuneins- Riding on Airasia's Growth

Background



Tune Ins Holdings Bhd ('Tuneins') is involved in the provision of various general and life insurance products in the Asia Pacific. The company offers a range of online insurance products, including travel, lifestyle protection, and guest personal accident insurance products. For more details, go here. 

Recent Financial Results

For QE30/9/2013, Tuneins's net profit increased by 3% q-o-q or 80% y-o-y to RM16.8 million while revenue increased by 2% q-o-q or 44% y-o-y to RM99 million. Net profit & revenue for the past 4 quarters are higher than the preceding 4 quarters numbers by118% and 145% , respectively.

Table: Tuneins's last 8 quarterly results


Chart 1: Tuneins's last 8 quarterly results
 
Valuation



Based on closing price of RM1.90 yesterday), Tuneins is now trading at a PE of 19.4 times (based on last 4 quarters' EPS of 9.75 sen). If we just assume a 3-year CAGR for net profit of 25% - a probable scenario given the rapid expansion in the Airasia group-, then the stock is deemed fairly priced at a PE of 25 times or a fair price of RM2.44. (Note: Based on current PE of 19.4 times & assuming a 3-year CAGR of 25% for its earning, the stock's present PEG ratio would be about 0.8 time). 

Technical Outlook

Tuneins has been consolidating in a "descending triangle" for the past 5 months. A breakout to the downside (below RM1.80) would be negative. An upside breakout above RM2.00 would be positive as it would signal the continuation of its prior uptrend.


Chart 2: Tuneins's daily chart as at Nov 18, 2013 (Source: Tragesignum) 

Conclusion

Based on the good financial performance & reasonable valuation (as per PEG ratio of 0.8 times), Tuneins is a good stock for medium to long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Tuneins.