Following the TGR AU sale approval, investors can now look to TGR SG as the main growth driver for the Group. As a recap, TGR SG recorded an impressive set of growth figures for 9MFY13 (revenue +30.7% YoY to S$444m) while its operating statistics for the quarter just ended has been equally positive and encouraging. Although TGR will continue to experience some drag from TGR AU – albeit at a lower 40% proportion – and SEAir (which is still in its infancy), we expect TGR SG’s performance to more than offset any draw-downs and continue to lead the ongoing recovery process for TGR. We reiterate our BUY rating on TGR with a lower fair value estimate of S$0.79 (S$0.86 previously) after taking into consideration the recent rights and PCCS issuance.
ACCC approves TGR AU sale to Virgin
Tiger Airways (TGR) announced yesterday that it received approval from the Australian ACCC to sell 60% of TGR AU to Virgin Australia. This long-awaited approval was met positively and TGR’s share price closed more than 6% higher as a result.
TGR SG’s performance will no longer be overshadowed
Following this approval, TGR will record a one-time gain on disposal of S$119.8m and shore up its balance sheet. More importantly, investors can now look to TGR SG as the main growth driver for the Group. As a recap, TGR SG recorded an impressive 30.7% YoY growth in 9MFY13 revenue to S$444m on the back of passenger load factor improvements (+3ppt to 84.3%). Subsequently, TGR SG has continued to post encouraging operating statistics for the quarter just ended (4QFY13), and passenger load factors are expected to increase by at least 4ppt to 84.4% from a year ago.
Some drag to remain from associates, TGR AU
While TGR AU will be a standalone entity following the expected sale completion in 2HCY13, we do expect the incurrence of losses to continue – albeit at a lower 40% proportion. Although operating losses have narrowed, TGR AU remains loss-making and this trend could continue until the new entity incorporates complimentary services with Virgin Australia. Similarly, TGR’s other associate – South East Asian Airlines (SEAir) – is still in its infancy stage and operating losses could still hit TGR’s books in the near-term.
Maintain BUY
Despite the risk of a drag on performance by its associates, we continue to stand by our assertion that TGR’s turnaround is ongoing. LCC’s such as TGR will continue to benefit from improvements in emerging Asia affluence and corresponding increases in consumer demand from a value/cost standpoint. Maintain BUY rating on TGR with a lower fair value estimate of S$0.79 (S$0.86 previously) after taking into consideration the recent rights and PCCS issuance.
Tiger Airways (TGR) announced yesterday that it received approval from the Australian ACCC to sell 60% of TGR AU to Virgin Australia. This long-awaited approval was met positively and TGR’s share price closed more than 6% higher as a result.
TGR SG’s performance will no longer be overshadowed
Following this approval, TGR will record a one-time gain on disposal of S$119.8m and shore up its balance sheet. More importantly, investors can now look to TGR SG as the main growth driver for the Group. As a recap, TGR SG recorded an impressive 30.7% YoY growth in 9MFY13 revenue to S$444m on the back of passenger load factor improvements (+3ppt to 84.3%). Subsequently, TGR SG has continued to post encouraging operating statistics for the quarter just ended (4QFY13), and passenger load factors are expected to increase by at least 4ppt to 84.4% from a year ago.
Some drag to remain from associates, TGR AU
While TGR AU will be a standalone entity following the expected sale completion in 2HCY13, we do expect the incurrence of losses to continue – albeit at a lower 40% proportion. Although operating losses have narrowed, TGR AU remains loss-making and this trend could continue until the new entity incorporates complimentary services with Virgin Australia. Similarly, TGR’s other associate – South East Asian Airlines (SEAir) – is still in its infancy stage and operating losses could still hit TGR’s books in the near-term.
Maintain BUY
Despite the risk of a drag on performance by its associates, we continue to stand by our assertion that TGR’s turnaround is ongoing. LCC’s such as TGR will continue to benefit from improvements in emerging Asia affluence and corresponding increases in consumer demand from a value/cost standpoint. Maintain BUY rating on TGR with a lower fair value estimate of S$0.79 (S$0.86 previously) after taking into consideration the recent rights and PCCS issuance.
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