Tiger Airways

Tiger Airways: CIMB maintains U/p with $0.63 TP. House note that Tiger’s proposed JV with Virgin Australia has received approval from Australia’s ACCC. It also concluded its capital-raising this week, though the bulk of its PCCS issue has been subscribed by SIA. Operational risks appear lower now. Add that the above developments have strengthened Tiger’s balance sheet and should limit the drag on its cash by associates. A stronger partner in Australia should also give Tiger Australia a much-needed boost to compete with the incumbent giant, Jetstar. However, remain wary of the cash burn by associates in Indonesia and the Philippines, which in the most optimistic case should only break even in three years’ time. Overall, think it is too early to buy into Tiger’s recovery. Maintain Underperform with de-rating catalysts expected from its continued cash burn. House SOP target price is based on 13.5x CY14 P/E.