Wednesday, February 16, 2011

Tiger Airways

Tiger Airways: Citi maintain Buy with New TP of $2.15. Note that house continue to like grp as it sees its well-executed business model (in terms of cost control and profit generation) leveraging on the multi-year structural demand growth in LCC traffic. Tiger is also an under-recognized proxy to the strong tourist arrivals into Singapore, mainly driven by the Integrated Resorts….

However, lower FY11-12E EPS by 9-11% and TP on higher fuel costs, note that Tiger may be able to pass s costs by raising ticket prices or increasing ancillary rev. While headwinds exist, believe there is little threat that Tiger may not find opportunities to deploy growing fleet. See grp as best positioned LCC to weather rising fuel costs, as passengers are less price sensitive....

While grp has no plans to implement a fuel surcharge, believe it has started to build higher base fares into its dynamic pricing structure to partially offset costs.

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