JPMorgan initiated coverage on Tiger Airways Holdings (TAHL.SI) with an overweight recommendation, citing the prospect of strong profit growth in the 2014-2015 financial year and a boost from its affiliates in Indonesia and Philippines.
Tiger Air, the short-haul low-cost-carrier unit of Singapore Airlines (SIA) (SIAL.SI), has been hit by the grounding of its fleet in Australia by the regulator last year due to safety concerns.
“With the normalization of Tiger Australia's operations and continued passenger or ancillary income growth, EBITDAR margins are likely to return to 21% in 2013 financial year, similar to the 2010-2011 level, after falling to around 5% in 12,” JPMorgan said in a report.
Tiger's shares were up 2% at $0.75, having gained more than 18% so far this year after plunging last year.
JPMorgan also started coverage on Malaysia's AirAsia (AIRA.KL) as overweight.
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