Tiger Air made an announcement of good news and bad news.
Good news is that it will sublease its 12 unused aircraft to InterGlobe Aviation Limited (IndiGo) for between 3 and 4 years, which will improve its cash flow by about $45 million a year.
Bad news is that the company will take a $93 million one-off provision relating to these aircraft.
Another piece of bad news is that the company is "reviewing various funding options (including the possibility of a rights issue) to proactively strengthen its balance sheet and meet its general corporate funding requirements."
Overall, my view for this stock is still very bearish and negative... but how low can this share go?
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.
Recent story: LINC ENERGY: Losses mount but someone's buying the stock!
Kit Whye, any comeback from you or Genting?
How are Linc’s assets being carried on its Balance Sheet (BS) ?
Total Reportable Segment Assets (30-June-2014) = AUD 942.971 million = BV = Book Value
1) Oil & Gas (Conventional) = AUD 593.680 million (Proven reserves only)
2) Coal (Conventional) = AUD 43.986 million
3) Clean Energy (UCG) = AUD 96.714 million
4) Shale Oil (Sapex) = AUD 136.907 million
5) Corporate/Unallocated = AUD 71.684 million
Based on BV,
Total Equity (net of liabilities) = AUD 267.189 million or NAV = SGD 0.50 per share = BV
Market Value (MV) of Linc’s assets are above its BV : Possible Additions ABOVE BV:
1) Oil & Gas (Conventional) = 2P (PV 10) of Alaska (Umiat) = USD 2,465 million, if reserve could be proven up from 2P to 1P
2) Coal (Conventional) = Potential Sale Price – AUD 43.986 million
3) Clean Energy = ? The Directors’ believe that the recoverable amount of goodwill exceeds the carrying value.
4) Shale Oil (Sapex) = possible billion, depending on de-risking process or validation ?
5) Corporate Assets = AUD 155 million (Carmichael Royalty) – AUD 71.684 million
Carmichael Royalty (under corporate assets) had been sold for AUD 155 million or AUD 83.316 million above BV or SGD 0.157 per share above BV.
Assuming Linc’s conventional coal assets could be sold for another AUD 155 million or AUD 111.014 million above BV or SGD 0.208 per share above BV
NAV(1+3+4) + RNAV (2+5) = SGD ( 0.50 + 0.157 + 0.208 ) = SGD 0.865 per share (pretty close to current share price)
RNAV (1+3+4) potentially could be worth a lot more - pure speculation - part & parcel of E&P sector.
If 20% of 2P (PV10) of Alaska (Umiat) asset could be proven up to 1P reserve, it translates to 0.20 x USD 2,465 million or about SGD 1.00 per share