TigerAir

UOBKayhian on 16 Jan 2014

FY14F PE (x): n.m.
FY15F PE (x): n.m.

Expect disappointing earnings. Tigerair will report 3QFY14 results on 24 January. We
expect the airline to post an operating loss of S$15.8m, reversing from 3QFY13
operating profit of S$17.9m. A 9.8ppt yoy decline in loads coupled with weak yields
should lead to operating losses. Load factor (PLF) for 3QFY14 was the lowest in three
years. Consequently, we expect yields to have remained depressed and assume a 12%
yoy decline but a 3% qoq improvement.

We raise FY14 net loss forecast by 176%, as we factor in S$13.5m of additional losses
from Tigerair’s divestment of its stake in Tigerair Philippines and a further S$4.5m losses
from the same over the next two quarters. We also lower our load factor assumptions by
1.3ppt to 77.7%. We lower FY15 net losses by 11% as we fine-tune our interest expense
assumptions.

Maintain HOLD. We value Tigerair at 1.2x FY14F book value and derive a fair value of
S$0.538. Recommended entry level is S$0.47, based on a 15% required return.