Tiger

Tiger: CLSA view that the most material alliance announcements made yesterday is the formation of a new airline in Taiwan, whilst only taking an initial 10% stake it could provide access to new North Asian markets. This will tie in with the deepening link with Scoot where they aim to increase marketing of each other services and run parallel flights. The press release does not mention China as a market but rather Taiwan, Japan and Korea as the North Asian markets to target. China is going to be difficult to access., given how tight the cross strait traffic is controlled. CLSA has a SELL rating with $0.52 TP on Tiger Airways, based on high valuations and unsustainable operations in Australia and the Philippines which partly led to excess capacity being deployed in Singapore, saturating the market.