Reuters: Hot Stocks: STOCKS NEWS SINGAPORE-Brokers say Tiger to benefit from Virgin deal

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STOCKS NEWS SINGAPORE-Brokers say Tiger to benefit from Virgin deal Oct 31st 2012, 02:22 Tue Oct 30, 2012 10:22pm EDT Several brokers said Tiger Airways Holdings Ltd is set to benefit after Virgin Australia Holdings Ltd said it will buy 60 percent of the Singapore budget carrier's Australian unit for A$35 million ($36.2 million). Tiger and Virgin Australia will team up to manage Tiger Australia. Tiger shares were flat at S$0.74 on Wednesday. The stock has increased 16.5 percent so far this year versus the 22 percent gain in the FT ST Small Cap Index. "We deem this as a longer-term positive. We think that Virgin is likely to optimise route portfolio by focusing Tiger Australia on shorter leisure routes and Virgin on longer routes better suited for its full-service product," CIMB Research said in a report. "We also view this as Tiger's attempt to focus on Asia's higher growth markets. Tiger Singapore is already profitable and management is committed to a breakeven in its Philippines and Indonesia associates." CIMB raised its target to S$0.83 from S$0.81 and maintained its 'neutral' rating on the stock. DMG & Partners Securities said it believes the price paid by Virgin is "fair" given that Tiger Australia's book value was negative S$222 million ($182.1 million) as of September. The broker upgraded it to 'buy' from 'neutral'. DBS Vickers said it views the deal as an opportunistic move by Tiger to improve its balance sheet and partner with Virgin. It raised its target price to S$0.95 from S$0.90 and maintained a 'buy' rating. OCBC Investment Research said Tiger can dispose of a substantial chunk of its loss-making entity while allowing it to retain participation in Australia's domestic market. But OCBC said any unexpected increase in losses from Tiger's associate airlines could derail its recovery process. 1009 (0209 GMT) Link this Share this Digg this Email Reprints

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