Tiger Airways

Tiger Airways: Announced a weaker then expected 1Q14 results which was largely weighed by past unrecognized losses from associates which weighed on bottom-line, resulting in a net loss of $32.8m versus a net loss of $13.7m y/y, while revenue at $236.2m (+30%). Operating loss narrowed to $6.2m vs an operating loss of $11.8m y/y, as Tiger S’pore and Tigerair Aus recorded a 36% increase in passenger traffic volume to 1.9m passengers, despite a traditionally weak quarter. This was however offset by lower yield, as average passenger fares fell 8% y/y to $94 on back of higher airport taxes which the group failed to pass on to clients, while total expenses was up 26% y/y to $242.4m due to higher capacity operated and the expansion of aircraft fleet. Bottom-line net loss widened due principally to a $26.6m share of losses from associates arising mainly from a reclassification of loans to net investment to Tigerair Mandala, where the group recognised a $20.6m share of loss in the associate. Meanwhile, share of loss from Tigerair Philippines amounted to $6m for the quarter. Going forward, financial results from Tigerair Aus will be deconsolidated from Tiger’s financial statements in the next quarter, where the group expects to report a positive operating profit thereafter. Although cautions of further expects losses from its associated airlines, Tigerair Mandala and Tigerair Philippines, as Tiger continues to strengthen its operations and expand in Indonesia and the Philippines. At current price, Tiger Air trades at 2.4x P/B versus Malaysia’s leading LCC, AirAsia’s 1.9x. Latest broker ratings as follows: CIMB downgrade to U/p with $0.60 TP Credit Suisse maintains U/p with $0.67 TP HSBC maintains O/w with $0.73 TP UOB Kay Hian maintains Sell with $0.55 TP