Tiger Airways

Tiger Airways: Co. has operating stats for April. House note that SG's traffic grew just 4% and was lower than the 9% capacity growth, leading to load factors falling by 4 ppt. The increase in capacity was due to the introduction of new routes to Colombo( Sri Lanka) and Kochi( India). Aus operations showed a greater yoy decline, but this reflects conditions prior to the implementation of flight restrictions. Loads however fell sharply as traffic fell faster than capacity reduction. UOB Kay Hian note that this is not a good start to FY13, but there is scope for traffic growth when the airline commences operations out of Sydney in Jul12, with the potential for providing feeder traffic from Scoot. But if April's week traffic continues for the 1Q, the firm will continue to be in the red Tiger Airways. Estimate a 25% growth in traffic for FY13 on the assumption that Australian traffic growth will resume. Value the stock at $0.64 TP or 1.5x FY13 and FY14 book value.