Tigerair

Tigerair: UOBKH expects a weak 3QFY14, but reckon it’s already priced in. The house expects operating loss of $15.8m, reversing from 3QFY13 operating profit of $17.9m. 3QFY14 PLF was the lowest in 3 years, consequently, yields are expected to remain depressed and assume a 12% y/y decline but a 3% q/q improvement. The house decribes associate contribution as a wild card. In 2QFY14, Australian, Philippines and Indonesian associates registered a cumulative loss of $24.0m and also showed impairment losses of $48.3m. Tigerair Philippines is likely to show better earnings q/q as PLF improved 9.1ppt in Nov- Dec 13. Recent divestment of Tigerair Philippines should aid cashflow. For example, in 2QFY14 Tigerair disposed of S$113m worth of assets amounting to 14.5% of PPE. The divestment of Tigerair Philippines and further SLB will improve cash flow. In 1H14, Tigerair registered FCF of S$30.0m despite posting losses. UOBKH maintains a Hold at TP $0.538, and highlights recommended entry level at $0.47, based on a 15% required return