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Hot stock: Tiger Airways remains in play; OCBC sees run-up as overdone

Tuesday, March 17, 2015 - 12:37
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SHARES of Tiger Airways (Tigerair) remained in active play on Tuesday, with OCBC Investment Research raising its target price for the stock on gains from fuel oil prices. It, however, kept its "sell" rating, noting that the recent run-up in the share price has been overdone.

SHARES of Tiger Airways (Tigerair) remained in active play on Tuesday, with OCBC Investment Research raising its target price for the stock on gains from fuel oil prices. It, however, kept its "sell" rating, noting that the recent run-up in the share price has been overdone.

The stock rose half a cent to S$0.33, with over 10.6 million shares changing hands as at 12.30pm on Tuesday.

"We think Tigerair will benefit from the lower jet fuel costs given its hedging exposure," it said. Consequently, the brokerage raised its fiscal 2016 forecast significantly, from a net loss of S$0.7 million to a net profit of S$50.6 million.

It also raised its fair value projection from S$0.23 to S$0.29.

"However, we still think there are much more to be done for Tigerair's turnaround through the alliance with Scoot to capture interlining traffic growth," the brokerage said.

"The uncertainty of air travel demand from the expected slowdown in global economy also gives us a good reason to remain cautious over Tigerair's near-term outlook," it added, pointing to four consecutive quarters of year-on-year decline in Tigerair's passenger volume.

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