CIMB upgrades Tiger to neutral; target $1.40

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 1.40

CIMB Research has upgraded Singapore budget carrier Tiger Airways (TAHL.SI) to neutral from underperform, but slightly lowered its target price to $1.40 from $1.43.

Tiger’s share price has recently fallen due to its weak full-year performance, uncertainties about its regional expansion and the share sale by its CEO, but most of the negatives have been gradually priced in, CIMB said.

Tiger CEO Tony Davis sold one million shares at $1.42, below the IPO price of $1.50, cutting his stake in the company to 0.57% from 0.75%, according to a filing to the Singapore Stock Exchange earlier this month. 

Tiger, which has a base in Singapore, is looking to expand its operations in Philippines, Thailand and Indonesia, CIMB said, adding that if its quest for a second base in Asia is successful, it could act as a share price catalyst.

However, Tiger has halted all services in Australia due to the ash coming from the Puyehue volcano in Chile and could face losses of up to $6.5 million per week depending on the period of service suspension, CIMB said.

But the brokerage said the event is a minor speed bump to Tiger Australia’s recovery and its longer-term prospects are still positive due to strong demand. CIMB added that the carrier is managing capacity in the country to limit losses.

At 10:51 a.m., Tiger shares were flat at $1.28 on a volume of 60,000 shares. The stock was around 31% lower so far this year.