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Tuesday, July 29, 2014

Chan Kit Whye: TIGER AIR Shares Could Be "Technically Worthless"

Source: http://www.nextinsight.net/index.php/story-archive-mainmenu-60/924-2014/8794-chan-kit-whye-on-tiger-air-

Prior to his retirement, Chan Kit Whye (left) worked more than 30 years as Regional Finance Director, Financial Controller and Manager in a multinational specialty chemical business. He has played an active role in CPA (Australia) Singapore Branch, taking up positions in its Continuing Professional Development and Social Committees. Kit Whye is a Fellow of CPA Australia, CA of Institute of Singapore Chartered Accountants and CA of the Malaysian Institute of Accountants. He holds a BBus(Transport) Degree from RMIT, MAcc Degree from Charles Sturt University and MBA from Durham Business School.


Tiger Air 24 July 2014: Announces a Q1 loss after tax of $65 million, of which $35 million represents share of loss of associates and $14.5 million shutdown costs for PT Mandala Airlines. 

tiger_airways_550Tiger Airways' current liabilities of S$316.3 million exceeded its current assets of S$232.6 million, as at the balance sheet date of 30 June 2014. NextInsight file photoOn the balance sheet, its accumulated losses have already wiped out all its ordinary share capital, leaving $218 million perpetual convertible capital securities. 

The big ticket item in the balance sheet is left with a $338 million debt and a cash balance of $167 million. 

Its working capital ratio is 0.73 and may trigger solvency issues in the near term. In other words, all those of you holding Tiger Air ordinary shares are holding shares which could be considered technically worthless at this moment. 

Believe it or not, it is market sentiment and the prospect of further restructuring that maintain its share price at the current level. 

Even at the current level, fundamentally, it is of very little value. Although the report put the NAV at $0.22, I would dare to say that all the value belongs to the perpetual security holders, not ordinary shareholders.

Can the company turn around? Yes, anyone can say it is possible to turn around the company, only if there is cash injection. Can the CEO dare to say there would be a turnaround without tapping more funding? 

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