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1、,-3.8,8.7,1,796,EV/IC,502,616,1.2,1.2,1.3,1.3,51,x,Company report,IndustrialsAirlinesEquity Singapore,abcGlobal Research,Tiger Airways(TGR SP),UnderweightTarget price(SGD)0.65Share price(SGD)0.75Forecast dividend yield(%)0.0Potential return(%)-13.3Note:Potential return equals the percentagedifferenc
2、e between the current share price andthe target price,plus the forecast dividend yield,UW:Low earnings visibility,unattractive valuation 3Q13 results show a much weaker-than-expected turnaround Singapore doing well but Australia is underperforming andassociate losses are widening;weak guidance sugge
3、stsnear-term earnings and consensus downgrade risks,MarHSBC EPSHSBC PE,2012 a 2013 e-0.11-0.04,2014 e0.0516.1,Reiterate UW with an unchanged target price of SGD0.65;valuation unattractive given low earnings visibility,Performance,1M,3M,12M,Absolute(%)5.6 0.7Relative(%)3.8-4.6Note:(V)=volatile(please
4、 see disclosure appendix)25 January 2013Rajani Khetan*AnalystThe Hongkong and Shanghai BankingCorporation Limited+852 3941.hkMark Webb*Regional Head of Conglomerate andTransport ResearchThe Hongkong and Shanghai BankingCorporation Limited+852 2996.hkView HSBC Global Research at:http:/*Employed by a
5、non-US affiliate ofHSBC Securities(USA)Inc,and is notregistered/qualified pursuant to FINRAregulationsIssuer of report:The Hongkong andShanghai Banking,Too small strides.Tiger Airways 3Q13 profit was SGD2m versus a loss of SGD17m in3Q12 and worse than our forecast profit of SGD20m.The y-o-y turnarou
6、nd in performancewas caused by a 42%y-o-y increase in passenger traffic,a 6ppts improvement in load factor,a 4%y-o-y rise in overall yield,and a 4%decline in unit cost.The performance was weakerthan we expected,mainly because of lower-than-forecast yield.Singapore operations didwell but Australia re
7、mained weak and losses at its two associates accelerated.Weak guidance,low earnings visibility.In its outlook statement,Tiger Airways guided toan operating loss in FY13,led by a weak fourth quarter.We believe that a well-performingSingapore business will continue to be overshadowed by Australia loss
8、es and poor associateperformance.Given the weak competitive positioning of Tiger Australia,Mandala andSEAir,we argue that profits are distant and Tiger Airways Singapore operations willcontinue to fund the other businesses.We now forecast a FY13 loss and lower our FY14-15profit estimates by 20-27%dr
9、iven partly by a higher fuel price assumption.Bloombergconsensus for FY13 forecasts a profit of SGD33m;we expect consensus downgrades.Reiterate UW,TP of SGD0.65.We continue to value Tiger Airways at a 9x EV/EBITDAR.Our new earnings estimates and rolled forward valuation still suggest a SGD0.65 targe
10、t price;we reiterate our UW rating.A key upside risk is a successful stake sale in Tiger Australia toVirgin Australia.We argue valuations are unattractive as Tiger Airways is trading at asignificant premium to AirAsia(AIRA MK,MYR2.8,OW)and Cebu(CEB PM,PHP61.7,N)on far weaker earnings visibility and
11、lower ROE expectations.Key financial statistics,Corporation LimitedDisclaimer&DisclosuresThis report must be readwith the disclosures andthe analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it,YE Mar EBITDARSGDmFY12a 25FY13e 110FY14e 197FY15e 228Source:Com
12、pany,HSBC estimatesIndexIndex levelRICBloombergSource:HSBC,EBIT HSBC NP EPS HSBC EPS PESGDm SGDm SGD SGD x-68-74-0.15-0.11-7.10-35-0.04-0.04-17.565 38 0.05 0.05 16.172 43 0.05 0.05 14.4STRAITS TIMES IDX Enterprise value(SGDm)3,220 Free float(%)TAHL.SI Market cap(USDm)TGR SP Market cap(SGDm),Source:H
13、SBC,P/BV EV/EBITDARx x2.5 61.32.9 16.32.4 10.22.1 9.7,9,-,-,-,-,-,Tiger Airways(TGR SP)Airlines25 January 2013Financials&valuationFinancial statements,Key forecast drivers,abc,Year to,03/2012a,03/2013e,03/2014e,03/2015e,Year to,03/2012a 03/2013e 03/2014e 03/2015e,Profit&loss summary(SGDm),Capacity g
14、rowth(ATK)%,y-o-y,24,15,15,RevenueEBITDADepreciation&amortisationOperating profit/EBITNet interest,618-36-31-68-8,85733-330-8,1,061108-4365-14,1,221126-5472-16,Traffic(RTK)%,y-o-yOverall load factorChange in overall yield%,y-o-yChange in unit costs per ATK%Jet fuel price,post hedging(USD/bbl),381-41
15、3128,2683101126,178461125,158400125,PBT,-101,-28,46,51,HSBC PBTTaxation,-75-4,-28-7,46-8,51-9,Valuation data,Net profitHSBC net profit,-104-74,-35-35,3838,4343,Year to,03/2012a,03/2013e,03/2014e,03/2015e,Cash flow summary(SGDm),EV/salesEV/EBITDAR,2.561.3,2.116.3,1.910.2,1.89.7,Cash flow from operati
16、onsCapexCash flow from investmentDividendsChange in net debt,-73-123-98073,144-248-2320231,154-258-1080199,154-250-1500206,EV/ICPE*P/NAVREP*Dividend yield(%),1.3-7.12.5-2.60.0,1.3-17.52.98.20.0,1.216.12.42.00.0,1.214.42.11.90.0,FCF equity,-199,-104,-104,-96,Note:*=Based on HSBC EPS(fully diluted)*EV
17、/IC divided by ROIC/WACC,Balance sheet summary(SGDm),Intangible fixed assets,0,0,0,0,Price relative,Tangible fixed assetsCurrent assetsCash&othersTotal assetsOperating liabilitiesGross debtNet debtShareholders fundsInvested capital,8322011611,0722241,0939322481,157,1,047124731,1893601,2371,1632141,3
18、74,1,2621811191,4564381,4821,3632521,617,1,4581931241,6594991,6921,5682951,870,2.521.510.50,2.521.510.50,2011,2012,2013,2014,Ratio,growth and per share analysis,Tiger Airways Hldg,Rel to STRAITS TIMES INDEX,Year to,03/2012a,03/2013e,03/2014e,03/2015e,Source:HSBC,Y-o-y%change,RevenueEBITDA,-0.7-148.0
19、,38.7-,23.8227.3,15.017.0,Note:price at close of 23 Jan 2013,Operating profit,-207.1,11.5,PBTHSBC EPS,-276.6-204.0,-,-,11.511.5,Ratios(%),Revenue/IC(x)ROICROEROAEBITDA marginOperating profit marginEBITDA/net interest(x)Net debt/equityNet debt/EBITDA(x)CF from operations/net debt,0.6-9.8-33.3-9.1-5.9
20、-11.0375.2-25.5,0.7-4.4-15.2-2.03.80.04.2544.035.312.4,0.70.716.43.810.26.17.9540.612.611.3,0.70.615.63.710.35.98.0532.112.49.8,Per share data(SGD),EPS reported(fully diluted)HSBC EPS(fully diluted)DPSNAV,-0.15-0.110.000.30,-0.04-0.040.000.26,0.050.050.000.31,0.050.050.000.36,2,Tiger Airways(TGR SP)
21、Airlines25 January 2013Too small strides 3Q13 results show a much weaker-than-expected turnaround Singapore doing well but Australia is underperforming and associatelosses are widening;weak guidance suggests near-term risks Reiterate UW with an unchanged target price of SGD0.65;valuation unattractiv
22、e given the low visibility on earnings,abc,Worse-than-expected 3Q13Tiger Airways 3Q13 profit was SGD2m versus aloss of SGD17m in 3Q12 and worse than ourforecast profit of SGD20m.The y-o-y turnaround in performance was causedby a 42%y-o-y increase in passenger traffic,a6ppts improvement in load facto
23、r,a 4%y-o-y risein overall yield,and a 4%decline in unit cost.1.3Q13 results vs.3Q12 and HSBC estimates,Tiger Airways Singapore operations performed wellwith a significant improvement in operating margins.Although yield increases were modest,the largerscale of the operation helped to lower unit cost
24、y-o-y.Tiger Australias performance remainedrelatively weak.Despite the sequentialimprovements in margins,the unit remained loss-making as yields continued to register a double-digitdecline y-o-y.The performance was weaker than we expected,mainly because of lower-than-forecast yields.Overall yields w
25、ere 9%below forecast.Additionally,Tiger Airways share of losses from,SGDm,3Q13,3Q12 Change HSBC%3Q13e,Diff%,associates was above our forecast.,PassengerAncillaryRevenueStaffDepreciationFuelMaintenanceLeaseOthersOperating costsEBITMarginAssociatesNon-recurring itemsNet finance costProfit before taxTa
26、xationProfit after taxHSBC PATEPS(cents),2004824833997231851230187%-8-1-17-5230.24,1402916825876201735181-13-7%0-2-2-170-17-15-2.56,43%68%47%30%10%28%13%4%46%27%NA15%NA-47%-25%NANANANANA,221512723291072423492442810%-40-222-220202.42,-10%-5%-9%2%-2%-9%-5%-21%4%-6%-37%-3%119%NA-36%-70%116%-90%-84%-90%
27、,Source:Company data,HSBC estimates3,Tiger Airways(TGR SP)Airlines25 January 20132.3Q13 operating performance vs.3Q12 and HSBC estimates,has improved,both from reduction in excess,abc,TrafficOverall(RTK m),3Q13 3Q12298 210,Chge HSBC Diff%3Q13e%42%298 0%,capacity that had plagued its operations early
28、 in2012,as well as from a more comprehensiveservice offering by integrating the groups,Passenger(RPK m)CapacityOverall(ATK m)Passenger(ASK m)Load factorOverall(RTK/ATK)Break-even load factorYields and costs(SGD cents),2,979 2,104352 2673,523 2,66885%79%78%85%,42%32%32%6%-6%,2979352352385%76%,0%0%0%0
29、%3%,multiple ventures and the more recent tie-up withScoot.However,the more encouragingdevelopment has been the October 2012announcement of a proposed 60%stake sale inloss-making Tiger Australia to Virgin Australia.,Overall(Rev/RTK)centsPassenger(Pax rev/RPK)centsFare per passenger(SGD)Ancillary per
30、 passenger(SGD)Total rev per passenger(SGD)Unit costs(Costs/ATK)centsUnit costs(fuel)centsUnit costs(ex-fuel)centsSource:Company data,HSBC estimates,83710525130652838,80710822131682839,4%1%-3%14%-1%-4%-3%-4%,91711627143693039,-9%-10%-10%-5%-9%-6%-9%-3%,The completion of this proposed transaction iss
31、ubject to regulatory approvals.Amidst all the good news,there have beenchallenges,too.Although both Mandala andSEAir are operating,their sub-scale operations inthe competitive Indonesian and Philippine,Weak guidanceIn its outlook statement,Tiger Airways is nowguiding to an operating loss in FY13,led
32、 by aweak fourth quarter.While Singapore is expectedto benefit from the recently introducedtigerconnect transfers at Changi,Tiger expects“keen competition among low cost carriers in theregion and the Australia domestic market tocontinue to pose a challenge for the Group toimprove its yield.”Addition
33、ally,“associateairlines,Mandala and SEAir,continue to facechallenges in their respective markets,and areunlikely to contribute positively to the Groupsperformance for FY12-13.”2013 should be betterThe 18 months since July 2011,when TigerAirways Australian units license was suspended,have been patchy
34、 for the group and the tide hasstarted to only turn lately.After operating limitedschedules for more than one year after thegrounding,Tiger Australia is now operating pre-suspension level flight operations.In themeantime,the groups two equity investments inIndonesia and the Philippines also resumedb
35、usiness.Tiger Airways Singapore performance4,markets,respectively,remain loss-making.TigerAustralias return to pre-suspension levels has notresulted in a return to profitability,especially dueto yield pressures,owing to the rivalry betweenthe two large players Qantas Airways andVirgin Australia.Perf
36、ormance and outlook by businessTiger Singapore decent prospectsOur conversation with the company suggests thatthe initial disruptions from the move to the mainterminal have been ironed out,the incrementalcost(mainly the difference in the passengerhandling fee of SGD10 per passenger)has beenentirely
37、passed on to the flyers and the receptionof this has been better than expected with almostno negative impact on demand.In fact,demand ofTiger Airways Singapore operations grew 28%over 3Q13 probably a combination of morecomprehensive service offerings through flightconnections with venture partners M
38、andala andSEAir,the tie-up with Scoot and attractive fareofferings.We expect Tiger Airways Singaporeperformance to remain decent.,20%,10%,0%,-10%,-20%,Tiger Airways(TGR SP)Airlines25 January 20133.Tiger Airways Singapore operating margins,fragmented market and Lion Airs dominance has inthe past made
39、 it difficult for competitors to sustainprofitable operations.We believe this is unlikely tomaterially change as the capacity addition plans ofboth Lion Air and Garuda suggest their dominancewill continue to plague other carriers.Tiger Airways initial investment of USD1 in,abc,1Q12,2Q12 3Q12,4Q12,1Q
40、13 2Q13,3Q13,Mandala has been wiped out by its share of,Singapore operating marginsSource:Company dataTiger Australia challenging outlookTiger Airways Australia performance hasimproved somewhat,but the business still remains,unrecognised losses and presently its share ofcumulative unrecognised losse
41、s stand atSGD14.3m.Additionally,Tiger Holdings hasprovided guarantees to the lessor to coverobligations for three aircraft leased by Mandala.6.Unrecognised losses from Mandala Airlines,loss-making,owing to high yield-based pressures.We think the prospective stake sale in the,SGDmMandala Airlines,1Q1
42、3-5.1,2Q13-4.1,3Q13-5.1,Australian unit is a potential positive for thegroup.We have always argued that Australia is adifficult market for Tiger Airways to make moneyin,mainly due to the intense competition betweenthe two large players that has resulted inprolonged yield-based competition.We think i
43、tsbetter for the group to reduce exposure to thisdifficult market and increase its focus on betterperforming markets like Singapore.PT Mandala Airlines,Indonesia 33%ownedMandala Airlines had a fleet of seven A320aircraft at end-December 2012.Indonesia is a4.Tiger Airways Australia operating margins,
44、Source:Company dataSEAir,Philippines 40%ownedSEAir operated a fleet of two A319 aircraft andthree A320 aircraft at end-December 2012 anddoes not plan make any additions to its fleet byMarch 2013.As highlighted earlier,thePhilippines has been negatively impacted bycapacity expansion in excess of dema
45、nd growthand this is probably likely to continue.Cebu Air,the Philippines dominant player,has beenstruggling to maintain yields,owing to the supply-demand imbalance.With this background,5.Tiger Airways Australia yield performance,5%-5%-15%-25%,11.010.09.0,10.5,9.0,10.6,9.3,-35%-45%-55%,8.07.0,8.3,1Q
46、12,2Q12,3Q12,4Q12 1Q13,2Q13,3Q13,3Q12,4Q12,1Q13,2Q13,3Q13,Source:Company data,Australia operating margins,Australia rev enue per RPK(SGD cents)Source:Company data,5,SGDm,Tiger Airways(TGR SP)Airlines25 January 2013SEAirs sub-scale operations and a reliance onClark Airports weak base,we estimate turn
47、ing,will continue to fund the other operations in themedium term.,abc,around this business will continue to remain achallenge in the medium term.,8.Fleet development at Tiger Group3QFY13 FY13e,FY14e*,FY15e*,FY16e*,Tiger Airways purchased a 40%stake in SEAirfor a consideration of USD2.5m(cSGD3.05m)in
48、,Tiger SingaporeTiger AustraliaMandala,19117,20117,25139,301511,321612,August 2012.In addition,Tiger Holdings hasprovided guarantees to the lessor to coverobligations for three aircraft leased by SEAir anda commitment for convertible loan to SEAir of upto USD10.5m(cSGD12.8m).Together,TigerAirways to
49、tal initial obligation with respect toSEAir is SGD15.9m.So far,the group hasrecorded its share of SEAirs losses,amounting toSGD12.1m.7.Losses from SEAir,SEAir 5 5 6 7 8Total 42 43 53 63 68Note:*Total aircraft addition plans are 10 each in FY14 and FY15 and 5 in FY16.Theallotment of these new deliver
50、ies is however not known,so assumed in the same proportionas the current fleet.Source:Company data,HSBC estimatesEstimates loweredWe lower our estimates for FY13 to incorporateweaker-than-expected 3Q13 results and thecompanys weak guidance,and we now forecast afull-year loss.We also lower our estima
