TigerairWays: CIMB Initiates with Underperform Rating and TP of $1.59, based on 8x CY12 P/E. note that though broker like Tiger for its time-tested low cost carrier model and industry dynamics favouring longer-term growth, inherent operational risks could still derail its growth trajectory, in our view….
Add that grp trades at 9.1x CY12 P/E, above the average of 8.4x for full service carriers. In view of its inherent operational risks, believe it should not be trading at more expensive multiples against premium airlines with lower risk profiles. Expect de-rating catalysts from, difficulties in securing pilots for its fleet expansion; regulatory hurdles for its SEAIR partnership in the Philippines; rising competition in Australia; and possible prolonged losses for its proposed Thai Tiger JV.
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