MARKET PULSE: Tiger Airways, Tat Hong (20 Sep 2012)

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.81

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.42

MARKET PULSE: Tiger Airways, Tat Hong

20 Sep 2012

KEY IDEA Tiger Airways: Momentum hindered While new Tiger Airways' (TGR) CEO, Mr. Koay Peng Yen, outlined a new initiative to focus on customer satisfaction and TGR's passenger data for Aug revealed MOM increases of 4% and 5% for the number of passengers carried on its Singapore and Australian operations respectively, a full recovery for TGR remains an optimistic proposition. Tiger Australia currently faces a challenging environment with an influx of excess capacity in the market following Qantas's plans to increase capacity in response to Virgin's additions. With profitability for Tiger Australia negatively impacted and fuel prices creeping upwards, we lower our projections accordingly. Therefore, our fair value estimate falls to S$0.81/share from S$0.83/share previously. Downgrade to HOLD. (Lim Siyi) MORE REPORTS Tat Hong Holdings: Investing for growth Tat Hong Holdings (Tat Hong) announced the placement of 70m new ordinary shares at S$1.20 per share, or a discount of 8% to Monday's closing price (S$1.30). This represents a 13.9% enlargement of Tat Hong's ordinary share capital (excluding treasury shares). About half of the net proceeds will be used to expand Tat Hong's highly profitable crane fleet (with ~60% gross margins). The remaining half of the net proceeds will be used to fund acquisition of land and buildings in Singapore and Malaysia as well as refinancing purposes. In our view, Tat Hong will continue to benefit from growing demand in the infrastructure, oil & gas and resources sectors in the medium to longer term, and raised our fair value estimate to S$1.42 (previously S$1.39) on 12x (previous 11x) FY13F EPS. Maintain BUY. (Chia Jiunyang)

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NEWS HEADLINES - US stocks made slight gains Wednesday, supported by strength in the housing sector, while energy stocks dragged on the market as oil futures dropped. The Dow rose 0.1% to 13,577.96. The S&P 500 Index climbed 0.1% to 1,461.05. - Kitchen Culture Holdings is proposing to diversify its business to include property development, investment and trading business. - OUE has disclosed that while it has offered a potential buyer exclusivity to conduct preliminary due diligence on Mandarin Orchard Singapore and Mandarin Gallery, at this stage it is uncertain if any transaction will be concluded. - Raffles Education agreed to purchase a plot of land in Iskandar Malaysia for ~MYR75m (S$30m) to house Raffles American School, its first entry into pre-tertiary education. - STATS ChipPAC expects that its 3Q12 net revenues to be 3% to 5% lower from 2Q12 due to weakness in the PC end market and delay in supply of wafers for high-end smartphones.