NOL - NOL raised to Hold by Citi; Less pessimistic on 2011

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

Citigroup upgrades Neptune Orient Lines (N03.SG) to Hold from Sell, says FY11E P/B at 1.2x looks fair vs liner peers, fair vs FY11E 11% ROE.

Raises target price to $2.40 from $1.80 due to higher BVPS estimates in line with higher earnings forecasts, which Citi raises by 23% in FY11E, 178% in FY12E (off low base).

"We turn less pessimistic on 2011E outlook (for freight rates) on hopes of increased capacity discipline. We turn more constructive on 2012+ outlook, as new supply appears to be limited and shipyards' 2012 slots are fully booked. We see upside to 2012+ freight rates."

Adds, key downside risks for stock include faster-than-expected U.S. consumer slowdown, less-than-expected supply, capex discipline by major industry players, faster-than-expected onset of additional capacity.

Shares down 0.9% at $2.16.

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