OCBC upgrades Tiger Airways to Buy from Hold, saying the carrier is on track for a turnaround. Tiger’s passenger traffic increased for the second straight month in November, with passengers carried up 30.1% on-year and 6.0% on-month, with the passenger load factor up by 10 percentage-points on-year and 2 percentage-points on-month at 85%, it notes.
“The group’s performance so far has been encouraging with Tiger Singapore leading the turnaround,” it says. “The tepid economic situation, which has resulted in a slowdown in premium travel demand growth, will continue to benefit low-cost carriers like Tiger especially in the ongoing peak season travel months.”
It expects Tiger’s alliance with Via.com, one of India’s largest travel networks with significant Indonesian and Philippine presence, will raise awareness for Tiger in a key market. Excluding a one-time gain from the Tiger Australia divestment, OCBC expects a modest return to profitability in FY13, following favourable operating environment developments, including lower jet-fuel prices. It keeps a $0.81 fair value. The stock is up 2.9% at $0.72.
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