Company Name: NEPTUNE ORIENT LINES LIMITED
| Research House: MacQuarie | Price Call: SELL | Target Price: 0.95 |
The shipping sector faces more downside risks in 2013, with both container and dry bulk facing more supply and weakening demand in the next 12 months, Macquarie says.
“For container shippers, we believe rates have peaked and excess capacity will start to bite in the next 12 months, with capacity discipline getting harder to enforce next year. For dry bulk, we do not expect any meaningful recovery for the sector until 2H14, and the magnitude of the 4Q rally will be moderate due to the US drought.”
It notes bunker-price relief proved short-lived, as bunker prices rose along with the oil-price recovery, likely putting additional pressure on carriers’ 4Q profitability.
“We believe liner earnings likely peaked in 3Q, and the outlook for the sector looks increasingly vulnerable in 4Q.” It notes it recently downgraded NOL to Underperform, with a $0.95 target. The stock is down 2.7% at $1.085.
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