Kim Eng Research in an Aug 26 research report says: "SIA's 32.8%-owned associate Tiger Airways has announced a 1-for-2 rights issue to raise $158.6 million. SIA will underwrite up to 81.8% of the total issue.
"At a rights price of $0.58 per Tiger share, SIA's subscription to its entitlement amounts to $51.9 million and a maximum potential commitment of $77.9 million. The issue will create no stress on its cash pile of around $6 billion. While the rights issue is not financially significant, we upgrade SIA to a buy following its share price correction of 25%, versus the STI's decline of 15%.
"Our target price is unchanged at $14.40, based on 1.2x P/B. Trough valuation in 2008 was a P/B of 0.8x, translating to a implied floor of $9.50. UPGRADE TO BUY."
"At a rights price of $0.58 per Tiger share, SIA's subscription to its entitlement amounts to $51.9 million and a maximum potential commitment of $77.9 million. The issue will create no stress on its cash pile of around $6 billion. While the rights issue is not financially significant, we upgrade SIA to a buy following its share price correction of 25%, versus the STI's decline of 15%.
"Our target price is unchanged at $14.40, based on 1.2x P/B. Trough valuation in 2008 was a P/B of 0.8x, translating to a implied floor of $9.50. UPGRADE TO BUY."
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