Tiger Airways

Tiger Airways: Various views on the recent fund raising exercise as follow: CIMB : CIMB downgrade from Neutral to UnderPerform with $0.63 TP. House note that timing of the latest fund raising transactions, came as a surprise as management previously sounded positive on funding; and house had expected any cash calls to come only after the finalisation of its stake disposal of Tiger Australia. Depending on subscription demand, SIA could emerge with a larger stake in Tiger, which could suggest greater involvement by the parent, a longer-term positive. However, proceeds will be largely used to pare down debt and fund bleeding associates. Think any meaningful return on capital can only occur further down the road. House is near-term negative on this transaction. Overall, house expect price weakness in the coming weeks as Tiger’s share price gravitates towards its theoretical ex-rights price of $0.674. Tiger’s associates’ outlook appears bleak and anticipate further cash burn in the coming qtrs. OCBC: House highlight that TGR is still on track to close out the year on a positive note, and this revitalisation of its balance sheet will give it the flexibility it needs to nurture its existing ventures. With the weak macro-environment continuing to favour budget airlines such as TGR, and leave forecasts unchanged. Reiterate BUY at an unchanged fair value estimate of $0.86. CS: CS note that the offering will help Tiger reduce its net gearing to a range of 13%-86% from 174%-287%, but the dilutive impact of the larger share base could cut EPS by 31%-38%. Tiger plans to form a JV in Australia by selling 60% of Tiger Aus to Virgin Aus. Approval of the deal by the Aus regulator—expected 14 March—could be a re-rating catalyst for the stock. However, stock looks unattractive based on existing fundamentals. House maintain U/p with $0.66 TP.