TUNEPRO: Strong First-Half Performance Driven by Strategic Gains, Positive Outlook Maintained

TA Securities views the first-half 2025 performance of an unnamed insurer as aligning with expectations, buoyed by a significant turnaround in its insurance service result and robust growth in its travel segment. The firm maintains its “Buy” recommendation, anticipating continued strength in the second half of the year.

Performance Review

For the first half of 2025 (1H25), the insurer recorded a net profit of RM14.4 million, representing 43.5% of TA Securities’ full-year forecast. This outcome is considered in line with anticipations, with management expecting a stronger second-half performance.

The period saw a remarkable turnaround, as the net insurance service result swung from a loss of RM14.2 million in 1H24 to a profit of RM11.5 million. This commendable improvement was primarily driven by several factors: lower net incurred claims due to more favourable motor and fire claims experience, a substantial 29.3% growth in the travel segment, and higher investment income.

Furthermore, the group successfully rebalanced its motor portfolio mix, leading to a 7-percentage point year-on-year improvement in its loss ratio. Coupled with the travel segment’s increasing weightage, now surpassing 50%, and the absence of large claims, the combined ratio notably improved by 13.6 percentage points to 93.9% in 1H25. On a quarter-on-quarter basis, net profit surged 44.1% to RM8.5 million, boosted by higher investment income and a positive contribution from its Thai associate.

Future Outlook and Strategy

Looking ahead to the second half of 2025 (2H25), the travel segment is poised for continued growth, supported by higher premium rates and improved take-up. The company is expected to benefit from the year-end travel peak season and its partners’ fleet expansion plans. Strategically, the group plans to introduce new offerings across all markets, including a Delay Lounge Pass, e-SIM, and a travel convenience pack.

In the motor segment, continuous improvement in the loss ratio is anticipated, driven by a strategic focus on profitable segments—particularly private cars with a sum insured above RM50,000—increased penetration in East Malaysia, and a partnership with PRULIA.

TA Securities maintains its bullish stance, citing the insurer’s successful turnaround, marked by four consecutive profitable quarters. The firm also projects a resumption of dividend payments in FY25, assuming a 40% payout ratio and a forward dividend yield of 5.4%.

Investment Recommendation

TA Securities reiterates its BUY recommendation with an unchanged target price of RM0.48 per share, based on 0.6x CY26 PB.