MARKET PULSE: Aviation Sector, CapitaLand, Roxy-Pacific (20 Feb 2013)

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

MARKET PULSE: Aviation Sector, CapitaLand, Roxy-Pacific

20 Feb 2013

KEY IDEA Aviation Sector: Budget trumps premium Summary: The Jan 2013 operating statistics for Tiger Airways (TGR) and Singapore Airlines (SIA) mirrored their recent corporate result performance. TGR saw passenger load factors (PLF) improve on effective capacity management for its Singapore and Australian segments while SIA continued to see PLF falter with capacity growth outstripping passenger demand. With the environment remaining challenging - particularly in the premium carrier space - we favour TGR over SIA in the coming quarters. TGR [BUY; S$0.86] shows more promise with its turnaround story intact, and we are expecting another positive showing for 4Q13. On the other hand, SIA [HOLD; S$10.85] will likely see passenger yields remaining depressed especially with other carriers introducing fare promotions of their own. Maintain NEUTRAL on the overall aviation sector. (Lim Siyi) MORE REPORTS CapitaLand Limited: Overall positive on Danga Bay project Summary: CAPL is taking a 51% stake, alongside Iskandar Waterfront Sdn Bhd (40%) and Temasek (9%), in a JV to acquire and develop a 71.4 acre freehold site in A2 Island, Danga Bay in Johor Bahru, Malaysia. This is the group's first major Malaysian township development, which is envisioned to be a premier waterfront residential community. Total land cost for the project is RM811m (S$324m), payable over 4.5 years, and its gross development value is estimated at RM8.1b (S$3.2b). We estimate CAPL's IRR for this project to be in the low to mid teens, and for this acquisition to accrete S$174m or S$0.04 per share to the group's RNAV. Maintain BUY with a higher fair value estimate of S$4.29 (20% discount to RNAV), versus S$4.04 previously, as we incorporate this acquisition into our model and update for valuations of listed holdings. (Eli Lee) Roxy-Pacific Holdings: 4Q results in line Summary: The group announced 4Q12 PATMI of S$23.3m, up 96% YoY mostly due to S$11.2m of fair-value gains on investment properties. Excluding one-time gains, we estimate core 4Q12 PATMI of S$13.9m which cumulates to full year earnings of S$48.9m - in line with our FY12 estimates. Topline for the quarter came in at S$56.2m, also up 33% YoY as revenue recognition from property developments increased. The group reports progress billings from already sold units at a healthy S$861.7m, equivalent to 4.5 times FY12 revenue, which we expect to underpin earnings over FY13-15 ahead. A final cash dividend of 0.92 S-cent is proposed. We would speak with the company later today regarding these results and, in the meantime, maintain HOLD and will review our fair value estimate of S$0.54. (Eli Lee)

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