NOL - CIMB keeps NOL at Outperform, $2.25 target

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED
Research House: CIMB

CIMB Keeps Neptune Orient Lines (N03.SG) at Outperform with $2.25 target price, pegged to 1.5X P/BV; says 2.4% sequential drop in average rates to US$3,104/FEU ($4,061/FEU) in 4 weeks to September 17 “should not prevent NOL from recording strong 3Q earnings” as 3Q average rate of US$3,120/FEU (forty-foot equivalent unit) +12% from 2Q “and is just a whisker away from the peak rate of US$3,127/FEU of 3Q08.” 

Notes, "important distinction is that in 3Q08, bunker averaged US$691/ton while in 3Q10, it averaged only US$454/ton. Even compared against 2Q this year, 3Q bunker was 4.0% cheaper." 

Adds, daily revenue in 3Q +55.5% on-year, +14% on-quarter to US$24.3 million, record high for NOL. Tips 4Q earnings likely to be sequentially lower, though expects rates in 2011 to stay strong on back of global trade growth, continued supply discipline on part of liner operators. 

Shares off 1.4% at $2.04.