Tunepro: A Possible Trading Buy

Results Update

For QE30/6/2017 (2Q17), Tunepro's net profit rose 9% q-o-q but dropped 51% y-o-y to RM13 million while revenue rose 3% q-o-q or 7% y-o-y to RM134 million. Revenue came from increase of RM3.2 million in Gross Earned Premium from the Philippines and Middle East markets in general reinsurance business and increase of RM0.6 million in investment income, mainly due to reversal of MMIP investment income in 1Q17. There was a decrease of RM2.0 million in Group's segment profit, from RM15.1 million in 1Q17 to RM13.1 million in 2Q17, due mainly to increases in net commissions mainly from general insurance business. [Note: Tunepro's result for QE30/9/2016 was released on August 18.]

Table: Tunepro's last 8 quarterly results


Graph: Tunepro's last 23 quarterly results

Valuation

Tunepro (closed at RM1.09 yesterday) is now trading at a PER of 14.7 times (based on last 4 quarters' EPS of 7.43 sen). Its dividend yield is about 4.6% (based on dividend payment of 5 sen in FY16). Based on these 2 valuation models, Tunepro is deemed fairly valued.

Technical Outlook

Tunepro broke below the medium-term downtrend line, rr at RM1.02 in late August. It then rallied to a high of RM1.12 before correcting back to about RM1.05. Today, it broke above the recent high of RM1.12- possibly starting its recovery.


Chart 1: Tunepro's daily chart as at Sep 7, 2017_12.30pm (Source: Malaysiastock.biz) 

Tunepro's immediate resistance could be the intermediate downtrend line, RR at RM1.30. If it can also break above this downtrend line, then Tunepro could begin its next upleg.


Chart 2: Tunepro's weekly chart as at Sep 7, 2017_12.30pm (Source: Malaysiastock.biz) 

Conclusion

Despite weaker financial performance and negative technical outlook, Tunepro remains a good stock for a recovery play due to its recent sharp selldown from RM1.60 to RM1.00.

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.