Company Name: NEPTUNE ORIENT LINES LIMITED
| Research House: UOB KayHian | Price Call: BUY | Target Price: 1.54 |
1Q13 is very likely to be profitable for the container shipping sector after 1Q12’s huge losses, UOB KayHian says, noting Asia-Europe and trans-Pacific rates are now above break-even levels and cargo volume will recover in February-March on the Lunar New Year effect.
“Carriers managed to push through rate increases at the beginning of the year given good capacity discipline and the come-back of cargo volume, and there will be another round of rate increases in mid-January.”
It expects the supply-demand equilibrium to be healthier in 2013-15 as self-discipline strengthens over time.
The house expects NOL (N03.SG) to see earnings upgrades in 2013, driving up the share price, on the sale of its office building and the potential 10%-15% improvement in trans-Pacific contractual rates; “Long-term earnings drivers for NOL could be improved efficiency alongside delivery of larger vessels in 2013-15.”
It rates NOL at Buy with $1.54 target. The stock is up 2.9% at $1.25.
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