Saturday, July 27, 2013

Tiger Airways 1QFY14: Singapore Operations Disappoint (UOBKH)

Tiger Airways
Share Price S$0.62
Target Price S$0.55
1QFY14: Singapore Operations Disappoint

Singapore operations were expected to be the silver lining, which could potentially boost earnings. However, the 5.0% decline in yields for Tigerair Singapore burst that bubble. We cut our FY14 net profit estimate by 29% and reduce our target price by 10% to S$0.55. Maintain SELL.


Results
• Operating profit trend reversed as Singapore yields declined. The S$6.2m operating loss vs our expectation of an S$13.2m operating profit was due primarily to a 5.0% decline in yields for the Singapore operations. This stood in contrast to our assumption of a 3.5% rise in yields for the group (4QFY13: +7.0%) The decline in yields was attributed to a lack of pricing power following a S$6.00 increase in passenger service charge (PSC) by Changi Airport. The average fare of Tigerair Singapore was flat at S$132.80 despite a near 5.0% higher stage length.

• Tigerair Australia losses narrowed. Despite achieving an extremely high load of 87.3% and marginally higher yields, Tigerair Australia’s recorded an operating loss of S$17.3m (-17.7% yoy).

• Total capacity rose 30% yoy but breakeven loads fell by just 1.0ppt. The numbers suggest that Tigerair is not benefitting from any operating leverage arising from higher volume. With yields declining, the outlook has become murky.

• Tigerair will consolidate two more months of Tigerair Australia’s results and subsequently equity account any losses

• Associates dragged earnings again. Tigerair recognised S$26.6m in associate losses - S$7.3m from Tigerair Mandala, an additional S$13.0m from previous unrecognised losses and S$7.3m in losses from Tigerair Philippines.

• Rights issue by Tigerair Mandala. Tigerair participated in the rights issue by converting S$26.0m of shareholder loans as capital. It is unclear if the move will result in Tigerair’s achieving a higher stake in the associate. The rights issue is expected to be completed by 26 July and Tigerair will announce its shareholding stake in Tigerair Mandala and as to whether it will participate via further equity injection.

• Operating cash flow positive, but barely. Despite recording S$236m in revenue, Tigerair generated just S$70,000 in operating cash flow. The airline sold two aircraft for S$102m via a sale-and-leaseback.

Stock Impact
• Market will be surprised by the decline in yields and further investment in Tigerair Mandala. The inability to pass on the S$6.00 in fare increase is quite telling and clearly shows the lack of pricing power. Tigerair thus appears to have little choice but to compete on volume, a strategy that is fraught with risk. Meanwhile, the continued losses by the associates and the prospect of further equity injection into loss-making associates is unlikely to add much confidence..

Earnings Revision/Risk
• We cut our FY14 net profit forecast by 29% after lowering our yield assumption by 4%.

Valuation/Recommendation
• Maintain SELL with a lower target price of S$0.55 (from S$0.61), or 1.4x FY14F book value, excluding perpetual securities.



Source/Extract/Excerpts/来源/转贴/摘录: UOB Kay Hian research
Publish date: 23/07/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock