Company Name: NEPTUNE ORIENT LINES LIMITED
| Research House: OCBC | Price Call: BUY | Target Price: 1.38 |
OCBC Investment Research upgraded container shipping firm Neptune Orient Lines to buy from hold but maintained its target price of S$1.38, citing a recent share price fall despite increasing freight rates.
NOL shares were up 0.4% at $1.21. The stock has fallen about 17% from its recent high of $1.45 on April 3, much further than a 1.5% fall in the broader market. “The correction in NOL’s share price does not seem warranted,” OCBC said.
The Shanghai (Export) Containerised Freight Index was currently 43% higher than last year, with Shanghai to Europe freight rates more than doubling, OCBC said. It added that transpacific freight rates were significantly higher than a year ago.
OCBC said shipping liners, including NOL, are profitable at current freight rates. After collectively losing at least US$6 billion ($7.4 billion) in 2011, liners are more disciplined in managing shipping capacity and refraining from price wars, it added.
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