Friday, May 20, 2011

Tiger Air

Tiger Air: 4QFYMar11 results largely in line with consensus at the pre-tax level, at $10.2m, -20% yoy. The decline was due mainly to higher fuel prices.
However bottom line at $1.3m, -94% yoy, was adversely impacted by the partial reversion of deferred tax assets (DTA) due to losses from the Australian. Nevertheless, DTA is non-cash, and utilizable for offset against future profits...

Group revenue grew 16.1% to $163m, in line with growth in capacity (+16.8%) and pax volume (+15.7%), and higher ancillary revenues. Load factor was at 84.2%.
For FY12, Tiger plans to grow its fleet by 9 aircraft to 35, but will keep Australia’s seat capacity unchanged...

Of key interest will be Tiger’s signing of a term sheet for the acquisition of 33% stake in PT Mandala Airlines of Indonesia. Mandala, which is currently undergoing a financial restructuring process, plans to adopt the Tiger’s low cost business model. The largest shareholder in the restructured Mandala will be the Saratoga group (51%), with the remaining 16% to be held by previous shareholders and creditors. Move may be seen positively as Tiger gains a foothold in Indonesia, a mkt with 44m passengers and 7.6% LCC penetration rate.

Credit Suisse maintains Neutral with TP $1.65. Says valuations not compelling at 13x CY2011E P/E, vs (profitable) peers at 10x P/E. Prefers AirAsia at 10x FY11E P/E and other plays on Spore tourism theme such as SIA, Genting SP.

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