Company Name: NEPTUNE ORIENT LINES LIMITED
| Research House: Deutsche Bank | Price Call: BUY | Target Price: 1.55 |
NOL is +3.0% at $1.205 at 2:50 p.m. “It’s just recovering from the sell-down post its results,” one analyst says. Another analyst notes container shippers are rising regionally.
In a report, Deutsche Bank notes the Shanghai Shipping Exchange’s SCFI index fell 0.5% on-week last week, but the decline was on Shanghai-to-Europe routes, while Shanghai-to-U.S. routes posted rate rises on-week.
Amid soft Asia-Europe volume, carriers are cancelling certain voyages, resulting in higher loading rates, DB says; "the solid vessel utilization should help to prevent rates sliding in any large scale going forward.” It adds, strong Transpacific routes, with firm loading rates, helped carriers push through a peak-season surcharge this month, with another general-rate-increase planned for September.
It estimates average 3Q rates will be more than 10% higher than 2Q’s, suggesting liners’ strong earnings recovery will continue; it estimates a 1% rate increase can boost liners’ 2012 earnings an average 72%. It remains positive on the sector, expecting a better 3Q to be a positive catalyst.
It rates NOL Buy with $1.55 target. Last week’s $1.22 peak may offer a cap.
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