Tiger Air

Tiger Air: signs an agreement to acquire 40% stake in SEAir in the Philippines (previously announced in Apr ’12), for US$7m. SEAir has negative book value of US$7m (as at Dec ’11) and reported a net loss of US$1m for 1QCY12. Based on FYMar12 results, the acq will result in Tiger’s loss per share expanding from 14.94cts to 16.15cts. Tiger will rely on internal sources to fund the acq. The acq is subject to regulatory approvals from the relevant authorities in the Philippines, and termination of all non-core businesses of SEAir to enable SEAir to focus on its core low cost carrier model business. Recall, in addition to its hubs in Australia and Singapore, Tiger is making use of JVs to expand its footprint in SE Asia, eg. Indonesia (via PT Mandala Airlines) and the Philippines (SEAir). Tiger trades at 2.1x P/B, and was loss making for FYMar12. The Street has mixed ratings on the stock with TP btwn $0.51 – 0.92.