Company Name: TIGER AIRWAYS HOLDINGS LIMITED
| Research House: DMG | Price Call: HOLD | Target Price: 1.40 |
Shares of Singapore budget carrier Tiger Airways (TAHL.SI) fell to the lowest intraday level since March 17 on news that Tiger CEO sold one million shares in the firm and on analyst concerns that its budget carrier alliance with Thai Airways may fall apart as the Thai carrier sets up its own regional airline.
Tiger shares dropped as much as 3.6% to $1.33 in early trade on Thursday, but had since edged up to $1.34. On March 17, Tiger stock hit an intra-day low of $1.32.
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.
“It shows that the management itself is not confident of the direction of the company,” said Melissa Yeap, an analyst at DMG & Partners Research.
“I think that’s why it’s particularly leading to the share price fall, coupled with the fact that Thai Airways is setting up its own airline,” she added.
Thai Airways (THAI.BK) announced that it will be setting up a new regional airline, tentatively called Thai Wing, which is expected to start operations in early 2012.
Last year, Thai Airways formed an alliance with Tiger to form budget carrier Thai Tiger Airways, but Thai Airways chairman said the launch would be delayed for another two or three months from May.
However, Yeap said DMG maintained its earnings estimates for Tiger partly because the brokerage had factored in the possibility that the Thai Tiger alliance will not materialize.
DMG has a neutral rating and a $1.40 target price on Tiger.
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