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NOL
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MrSubarashii
Member |
19-Nov-2014 21:32
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UOBKayHian
Neptune Orient Lines - BUY on cheap valuation.
(NOL SP/BUY/S$0.74/Target: S$1.01)
Assuming the disposal consideration at
US$720m, which is lower than market
expectation of US$1b, the book value
per share would increase by US$0.17 to
US$0.96 in 2015, equivalent to only
0.6x current 2015F P/B...
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Immortal
Master |
19-Nov-2014 20:34
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How low can NOL go.... |
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ruanlai
Elite |
19-Nov-2014 16:43
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NOL doing the DAILY SHARES BUY BACK izzit........ now 76cents.
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tianji
Veteran |
19-Nov-2014 14:56
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Neptune Orient Lines (NOL SP) http://research.uobkayhian.com/content_download.jsp?id=25565& h=5b755ace5b49029e32c3b90fb494edc BUY On Cheap Valuation NOL&rsquo s share price has dropped 22% since end-June to a five-year low, driven by the expectation of a third year of losses, weak freight rates, port congestion on the US West Coast and the potential sale of its profitable logistics business. We think the market has overacted to these negative factors. Current valuation at only 0.74x 2015F P/B is very cheap, vs its historical 0.9-1.0x P/B and peers&rsquo average of 0.8x P/B. Maintain BUY. Target price: S$1.01. WHAT&rsquo S NEW Share price plunged. Neptune Orient Lines&rsquo (NOL) share price has dropped 22% since end-June to S$0.74, the lowest in five years. The share price weakness was driven by: a) weaker-than-expected freight rates, b) the port congestion in South California, c) the potential sale of its profitable logistics business, and d) the high possibility of being in the red again in 2014, its third consecutive year of losses. Transpacific (TP) rates remain stable but Asia-Europe (AE) rates still weak. TP rates were raised by US$163/FEU last week and now stand at US$2,090/FEU (+11% yoy). The utilisation at the Far East to US West Coast route is 90%, slightly lower than the East Coast&rsquo s 95%, due to congestion problem. However, AE rates are still hit by the weak EU economies as well as the over-supply issue. After the increase of US$615/TEU to US$1,312/TEU on 1 November, AE rates kept declining and dropped to US$934/TEU last week. The utilisation has also declined to 80-85%. The port congestion in US West Coast remains unresolved but things will be better going forward. The port congestion problem in US West Coast caused NOL&rsquo s per FEU cost to increase 1% yoy in 3Q14 while its cost-efficient programme is still intact. The problem is still not resolved. But we expect things to be better, going forward. The anchored ships in South California have been reduced from 12 to 8 last week, according to the executive director of the Marine Exchange of Southern California. Although this is still far from the normal condition, we see it as a good sign of improvement. Meanwhile, TSA announced a US$1,000/FEU port congestion surcharge for US ports yesterday. As a member of TSA, NOL will also implement this surcharge to compensate for the additional cost incurred due to the port congestion. In the long term, we expect port operators and shipping liners to join force to update the equipment in the ports to better serve the larger vessels and resolve the congestion issue completely. Market overreacting to NOL&rsquo s likely third year of consecutive loss and ignoring its efforts in cost efficiency. Although NOL is likely to see a third consecutive year of losses, its core business does show an improvement in 2014. Its core EBIT loss fell only 31% yoy in 9M14. It has launched a cost-efficient programme since 2011, covering vessel renewal, extra-slow steaming, and improving its network design and IT system. In 9M14, NOL&rsquo s cost per FEU still dropped 1% yoy amid added costs, including port congestion cost and G6 start-up cost. In terms of vessel renewal, it has received 10 newbuilds and redelivered 17 charter ships in 9M14. With 19 ships to expire in 2015, we hope its per FEU cost will improve further in 2015. The 2015 contractual TP rate is likely to be higher than in 2014. Demand in the US is better in 2H14 than in 2H13 due to the recovery in the US economy. Ytd, the average TP rate is US$2,017/FEU, up 6.2% yoy. Therefore, it is reasonable to expect the 2015 contractual rate to be higher than 2014&rsquo s US$1,700/FEU. NOL will benefit from the rise in the TP contractual rates as over 40% of its container shipping revenue is from the TP lane. The potential sale of the logistics business will bring huge one-off gain. The book value of its logistics business was US$124m as at end-13. Assuming it is sold at 10x core EBIT and that its core EBIT in 2014 is US$72m (+4% yoy), the consideration will be US$720m. The large disposal gain will ensure NOL turn in a profit in the year the transaction is completed although selling a profitable business will hurt its long-term profitability and its valuation multiple. EARNINGS REVISION/RISK None. VALUATION/RECOMMENDATION Maintain BUY and target price of S$1.01, based on 1.0x FY15F P/B. NOL is trading at a very cheap 0.7x FY15F P/B, compared with its usual 0.9-1.0x forward P/B. The current valuation discount is not justified. If the market downgrades NOL&rsquo s valuation due to the potential sale of the logistics business, the market should also include the potential disposal gain in FY15&rsquo s book value. Assuming the disposal consideration at US$720m, which is lower than market expectation of US$1b, the book value per share would increase by US$0.17 to US$0.96 in FY15, equivalent to only 0.6x current FY15F P/B. We expect the price downside is very limited for NOL. BUY on cheap valuation. SHARE PRICE CATALYST Freight rate increase and a recovery in the global economy. |
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earlybird14
Supreme |
19-Nov-2014 12:03
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You Ruanlai loh.
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ruanlai
Elite |
19-Nov-2014 11:40
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If tell me COSCO won more than US$100millions of contracts, I will definitely believe. CHINA COSCO up today why SG COSCO no move leh
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ruanlai
Elite |
19-Nov-2014 11:36
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You believe NOL just won the contracts more than US$100millions. Hahaha , BIG JOKE right ! I straight away REPLY to my friend " SIAO"
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earlybird14
Supreme |
19-Nov-2014 11:09
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Another today joke?
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Lucky03
Elite |
19-Nov-2014 09:32
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Maybe Alibaba may be interested in APL Logistic ? | ||||
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earlybird14
Supreme |
19-Nov-2014 08:56
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today joke???? |
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MetalTrader3
Supreme |
19-Nov-2014 08:01
Yells: "Let Your Ignorance Be Shown Tommorrow! ~ PredictorX" |
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Updated Song:
On 10 Nov- I stated a Timeline: Within 3 years from now (10 Nov 2014- 10 Nov 2017). I bet my entire reputation on this prediction. If in future, Combined Value of NOL did not rise above my NOL prediction ($1.065)- My reputation will be zero & I will retreat from sharejunction forever. The trading realm will be my judge. https://www.youtube.com/watch?v=pMkRmH8dpgw&list=FLIGZIWveB2xf_-PhUBfo0Mg&index=3
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earlybird14
Supreme |
18-Nov-2014 16:40
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Today joke.
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wait4opp
Master |
18-Nov-2014 16:08
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Good opportunity to be takeover by any of the china shipping company soon. Maybe YZJ will be interested in it. |
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earlybird14
Supreme |
18-Nov-2014 10:02
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loaded some @ 74. slowly accummulating with a range 60 to 80. Good luck to all vested. Can only hope Temasek do their job and manage their baby well. |
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famouspinky
Supreme |
16-Nov-2014 23:52
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I didn't know that my 'prediction' of 50 cents can be in the newspapers?
I only say say don't take it too seriously:)
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Lucky03
Elite |
16-Nov-2014 21:26
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Be warned the article below is very long and focus on automation as the long term solution to solving the sizzling hot pick up of volume at the Southern California port. The irony is that with such high volume, liners esp APL should be doing a roaring job but alas, NOL reported suffered US$30m increase in operating expenses in Q3 ! Hope they have managed to settle into the unexpected challenges and learn to gain from the seemingly positive growth. Hopefully the unions also strike a deal fast so that they can get their act together :
Near-record volume is main driver of LA-LB congestion, study finds Bill Mongelluzzo, Senior Editor | Nov 14, 2014 5:54PM EST The deterioration in truck turn times at the ports of Los Angeles and Long Beach the past six months was due primarily to near-record container volumes at the ports. Chassis shortages, a truck capacity crunch, labor slowdowns and a half-dozen other events were simply irritants that made the problem worse. ?There have been no significant new congestion generators in six months. Record delays are attributable to near-record volume,? said Val Noronha, president of Digital Geographic Research Corp. The troubling message to take away from Noronha?s research for the largest U.S. port complex, and for other large container gateways, is that growing container volumes carried by bigger ships that discharge their loads in a narrow window of time are forcing ports to their saturation capacity. For some ports, the saturation point could be a reflection of terminal capacity and landside infrastructure, but outdated cargo-handling processes contribute greatly to the problem. ?Performance capacity is the issue now,? Noronha said in an interview this week following release of his research paper, ?Turn Time ? Meltdown or Summer Heat Wave?? The ultimate answer to saturation capacity at the busiest container ports could be automation, Noronha said, because automation allows terminals to temporarily store containers in the yards in stacks that are higher and wider. A denser operation allows the terminal operator to handle more container throughput on an existing land footprint, and to do so more efficiently. Noronha has studied truck turn times in Los Angeles-Long Beach the past several years using GPS technology that updates truck positions every few seconds. His most recent study focused on the current degradation of truck turn times at the marine terminals, but the conditions faced by truckers are also a reflection of the terminals? reduced productivity of vessels at berth and the overwhelming yard congestion. His numbers show that in October truck turn times hit a new low, with 36 percent of all truck visits lasting more than two hours. Trucking interests consider a one-hour turn time to be adequate for a single transaction, and two hours or longer to be so bad that it prevents truckers from earning an adequate living because they are paid by the trip. Noronha said his research shows that due to the lengthy turn times, the average trucker must now budget four to four and one-half hours per visit to the harbor. That is up from two to three hours in 2010, and explains why many drivers are averaging fewer than two round trips per day. Container volumes at all major U.S. gateways are increasing as the economic recovery gains steam. This is the case in Los Angeles-Long Beach as well, even though some cargo has been diverted to ports in Canada and on the U.S. East Coast since summer. Cargo interests are attempting to escape growing congestion problems at West Coast ports and the uncertainty due to the inability of the International Longshore and Warehouse Union and the Pacific Maritime Association to negotiate a new contract by the July 1 deadline. The Los Angeles-Long Beach container volume in September of 1.4 million 20-foot containers was the fourth highest monthly volume ever, Noronha said. The ports went through a five-year lull in volume growth beginning with the economic recession of 2008-09. The incremental growth in volume masked the fact that the ports were edging toward their saturation capacity. Beginning with the brutal winter of 2013-14 in the eastern half of North America, a variety of factors began to contribute to port congestion. Equipment and rail-car shortages that worked their way west, the impact of cargo surges from mega-ships with capacities of 13,000 to 14,000 TEUs, longshore labor actions and trucker strikes created an environment of declining port productivity on the West Coast, especially in Southern California. The knock-out punch came with a surge of container volume in the spring as cargo interests shipped early to beat the July 1 ILWU contract deadline. Strong volume growth has continued. Noronha compared the ports to a freeway at 3 a.m. There is plenty of capacity to handle the traffic. Add weather conditions such as snow or rain, or other incidents such as an accident, and velocity is reduced, but freeway capacity is usually sufficient to handle the traffic. However, if those conditions persist into the morning rush hour, traffic velocity deteriorates rapidly and gridlock results. JOC.com recently identified at least a dozen factors contributing port congestion in Southern California. Noronha said all of those factors play a role in port congestion and longer truck turn times, but there is no data available to quantify the contribution of each irritant to the mix. Furthermore, many of the factors will be addressed over time. Equipment providers are working toward establishing the neutral, or gray chassis concept in the harbor beginning Feb. 1, 2015. The ILWU and PMA will eventually have a contract. Railroads are adding locomotives and rail cars to their fleets, and they are adding tracks in key corridors. However, growing container volumes carried by big ships will continue. Barring another recession, the seasonal spikes in cargo volume before Chinese New Year in the winter, back-to-school shipments in the summer and the fall peak-shipping season will again slam the ports with container volumes that will bring them to their saturation capacity, Noronha said. Terminal operators may hesitate to accept this theory because West Coast ports are generally believed to have excess capacity. The capacity glut is worse in the northern ports of Oakland, Seattle and Tacoma, where cargo volumes are not increasing as rapidly as they are in Southern California. Terminal operators at those ports estimate excess capacity at more than 50 percent. In Los Angeles-Long Beach, the terminals say excess capacity is about 30 percent. Noronha is not so much concerned with the listed or design capacity of the terminals, but their effective capacity, especially during the seasonal cargo spikes. His numbers show that, at least this year, when the monthly volume hit 1.2 million TEUs, the real troubles began. That is what his numbers for degradation of truck turn times this summer and fall showed. ?If there?s a surprise, it?s that the numbers weren?t worse,? he said. Gene Seroka, executive director of the Port of Los Angeles, finds merit in Noronha?s theory. Seroka told a conference of West Coast forwarders and customs brokers last month that several of the port?s terminals were operating at 90 percent capacity utilization. The industry rule of thumb is that terminal velocity begins to deteriorate when utilization exceeds 80 percent of the listed capacity. Noronha is concerned about the ability of the ports to handle normal seasonal volume spikes, but also unforeseen irritants such as chassis shortages and weather-related problems that degrade the entire supply chain and reduce service levels at the ports. ?The current problems are severe, and the loss of capacity is intolerable,? he said. The congestion problems of the past six months send a clear message to the ports and terminal operators that they do not have year-round excess capacity, so they must focus on their performance capacity to handle cargo, Noronha said. While there is no single answer to the complex issues faced by terminal operators, automation can contribute to a solution, he said. Automating the movement of containers from the foot of the ship-to-shore container crane to the container stacks in the yard, and the movement of containers from the stacks to truck and rail transportation, accomplishes several goals. Automation significantly improves worker safety because the jobs now performed by longshoremen moving containers on tractors within the yard, and lifting the containers into and out of the stacks, are eliminated through the use of automated guided vehicles and automated stacking cranes. Some tasks are shited to the operating tower. The bottom line, though, is that with the elimination of workers in the cargo-handling areas of the terminal, there are no workers there to get hurt. Automation eliminates some jobs and therefore reduces terminal operating costs. An April study by the Port of Los Angeles on automation being installed at the TraPac terminal concluded that 40 to 50 percent of the longshore jobs will be eliminated. The savings in cargo-handling costs continue year after year and eventually offset the huge cost of implementing automation. Noronha focuses on the enhanced ability of terminals to stack containers in an automated environment. At present, longshoremen operating rubber-tired gantries and other container-handling machines are limited as to the size of the stacks they can build. However, rail-mounted gantry cranes such as those used at European terminals can stack the containers higher and wider. This significantly increases the throughput volume of a terminal. The denser operations will be needed as the annual throughput of busy terminals grows to exceed 1 million TEUs a year. However, automation is a lightening rod for criticism and work slow-downs from longshore unions because they want to preserve the jobs of their workers, and the potential jobs that will be available to the sons and daughters of the current workforce. U.S. terminals to date on both coasts have only moved forward with automation when they calculate that their growing container volumes will be sufficient to produce a return on the massive investment that is required. Automation can also be a factor in pushing the landlord ports on the West Coast to take a more active role in protecting their investments. The ports are investing hundreds of millions of dollars to modernize the terminals and build the landside infrastructure necessary to handle the growing cargo volumes. They recover those investments through the lease rates and other port charges paid by the terminals. In a presentation last month to the annual conference of the Footwear Distributors and Retailers of America, Sam Ruda, chief commercial officer at the Port of Portland, said the existing labor-relations model of the PMA and ILWU is not sustainable. Ruda said the ports should have a role in protecting their assets, but they have not yet found what their role is. Contact Bill Mongelluzzo at [email protected] and follow him on Twitter: @billmongelluzzo |
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Lucky03
Elite |
16-Nov-2014 21:04
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Always wonder if NOL is missing out on all these developments or benefiting as reported below as APL is hardly mentioned in such news. I'm getting too pessimistic for disappointing news from NOL.... that's why I thought they need to inject some new management blood to regain credibility from investors :
Big trans-Pacific GRI in the works as carriers see capacity crunch coming JOC Staff | Nov 14, 2014 6:59PM EST Carriers in the trans-Pacific eastbound trade will follow this week?s announcement of a $1,000 congestion surcharge with a proposed $1,000 per container rate increase to take effect in mid-December. Sensing a capacity squeeze developing at a normally slow time of year, due in part to the effects of the port meltdown in Southern California, carriers will attempt to implement the largest one-time rate increase in many years. Hanjin yesterday disclosed a $1,000 per 40-foot container equivalent congestion surcharge. Maersk Line communicated the increase in a notice to customers on Friday, but plans are for the full 15-member Transpacific Stabilization Agreement to announce the increase at some point next week. The increases announced by Maersk for all shipments from Asia to the U.S. and Canada are $900 per 20-foot container, $1,000 per 40-foot container. The TSA rates will only cover Asia to U.S. routes. For a 40-foot container to the West Coast the increase would represent a 48 percent increase over the current Shanghai Containerized Freight Index spot rate of $2,090. The rare opening to go for a substantial rate increase is the result of continuing strong volumes flowing from Asia to North America, as well as transportation factors such as a developing shortage of available containers in Asia, one informed source told JOC.com. That is due to difficulties carriers are experiencing repositioning empties from North America back to Asia due to the congestion being experienced at Los Angeles-Long Beach and other West Coast ports. |
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Lucky03
Elite |
16-Nov-2014 17:29
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I'm out of both but I have to admit mistakes in both Hankore and IPCO. I exited Hankore way too early while I entered IPCO purely for speculative reasons. Both turned out unwise. The difference is that I made less with Hankore while I cut loss with IPCO. The challenging one is with NOL. I can see that the shipping industry should have seen its worst and poised for turnaround spurs by improved demand although oversupply will stay to keep a cap of freight rate. The current steep drop in oil prices is a pleasant bonus while the sever congestion threaten to set the liners back. So, good and bad news need to be assessed carefully as to which one will tile the balance.
I've no chance to see the guru report on NOL in the Chinese paper. You mean it predicts NOL will fall to 50c after the technical rebound ? Personally, I seriously doubt so esp after it successfully sell of APL Logistic anything above US$720m. Watch for QE announcement for Europe. It has tremendous potential to result in significant demand for containership. North America will continue to remain strong and hopefully they can resolve the congestion problem soon as demands continue to pick up and ships are getting larger. 2016 will likely see recovery as supply growth tapers off and demand starts to pick up again. Market moves almost a year ahead. So, watch out for 2015. Can see more liners turning around or reducing their losses this year. So it depends much on the competency and wisdom of NOL mgmt. Maybe if someone with a strong track record joining NOL may give it a much needed boost in credibility.
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ysh2006
Supreme |
16-Nov-2014 16:49
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Mr Lucky03 Are you still in Hankore & IPCO , both stock don' t do well either, NOL in yesterday Chinese newspaper charting guru gave onl yfor temporary rebound but eventually will drop till 50C ? still can wait ....
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lifeisgood
Supreme |
16-Nov-2014 16:26
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If bring back Goh Chok Tong maybe got hope.
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