Operating stats improve for second consecutive month
Tiger Airways (TGR) saw increased passenger traffic for the second consecutive month, mainly on the back of TGR SG. Passengers carried grew 30.1% YoY (+6.0% MoM) and passenger load factor (PLF) rose by 10 ppt correspondingly from a year ago to 85% (+2ppt from Oct), which was aided by a slower pace of capacity expansion. TGR AU also experienced marginal improvements with passengers carried and PLF increasing 9.6% MoM and 5 ppt respectively to 86% respectively1.
On track for turnaround
The group’s performance so far has been encouraging with TGR SG leading the turnaround. Although the group registered a net loss for 1H13, on the operating profit level, TGR SG recorded a gain of S$8.6m versus a loss of $4.5m over the same period the previous year. The tepid economic situation, which has resulted in a slowdown in premium travel demand growth, will continue to benefit low-cost carriers like TGR especially in the ongoing peak season travel months.
Favourable jet fuel prices
Fuel prices continue to be softened by the absence of a supply crunch – this despite geopolitical tensions in the Middle-East – and this has translated to favourable jet fuel prices. Average prices as measured by the JETKSIFC Index thus far for 3Q13 are at S$156/barrelequivalent, which is slightly lower than the 2Q13 average of S$158/barrel, and could possibly trend lower to end the year.
Upgrade to BUY
Despite TGR’s share price declining by a further 5% since its 1H13 results, it has since consolidated close to one standard deviation below its average P/B multiple, and we believe that an inflection point has emerged. Excluding a one-time gain from the TGR AU divestment, our FY13 estimates still point to a modest return to profitability following favourable developments in its operating environment. Upgrade to BUY with an unchanged fair value estimate of S$0.81.
Tie-up with Via.com to help Indian segment
As part of its plans to boost its network and reach, TGR recently entered into an alliance with Via.com – one of India’s largest travel networks with significant presence in Indonesia and the Philippines – as the exclusive travel agent distributor for its tickets in India, Indonesia and the Philippines. A combination of promotional fares and Via’s extensive distribution network will raise awareness for TGR in a key market where it currently operates from six cities.
No comments:
Post a Comment