Tiger Air

Tiger Air: CIMB maintains U/p with $0.63 TP. CIMB made a house call on Tiger last week, and while like Group CEO Koay Peng Yen’s focus on long-term shareholder value. Expect a gradual breakaway from a dogmatic low-cost approach to a more return-focussed model, and think that Tiger is in good hands. Having said that, house maintain Underperform call in light of continued near-term cash burn from associate losses. House SOP-based TP of $0.63, pegged to 13.5x CY14 P/E or the LCC industry's 5-yr historical forward average, also includes proceeds from its planned Tiger Australia stake sale. Conclude that Tiger is currently trading at 15.1x FY14 P/E, above the current low-cost carrier (LCC) industry average of 12x P/E. Valuations are rich in house view.