CSFB: 4 mar Tranmil (Underperform)

● Management said that the new focus would be on the narrow
segment, with an eye on the possible early liberalisation of cargo
between ASEAN member states.
● Management talked of the need to renew its aging fleet with more
fuel-efficient aircraft, and was keen to expand into North Asia.
● Management said that its MD-11 contracts to fly into the US are
unlikely to be renewed in 3Q08. Thus it is looking to redeploy or
sell these aircraft. A decision is expected in 2Q08.
● Independent aircraft valuers priced Transmile’s four MD-11
freighters at an average price of between US$43 mn and US$47
mn – significantly lower than our previous estimate of US$75mn,
apparently due to the aircraft’s condition.
● Based on the lower average price of US$45mn per MD-11
freighter, we have lowered our target price to RM1.65 (10%
implied downside). Maintain UNDERPERFORM.