I just saw someone posted this from another stock forum.
I re-post it here.
Updating the news of potential review of the Warchlist is good governance but not a common practice. I hardly remember coming across any such company willing and proactively make such announcement ahead of the event happening. I doubt NOL will be put on Warchlist comes Mar but over the next few days, shortists can easily build on the fear. With UOBKH recommending shorting on technical ground and yet stating that it is still positive that NOL TP is $1.40 and recommending long term HOLD and BUY.
My trading account is not UOBKayhian hence I did not know that UOBkayhian had this latest recommendation of long-term HOLD and BUY on NOL with TP $1.40
enter: I think it's a requirement. Just now I saw that Cacola Furniture has also posted about its 3 years of consecutive losses and the possibility it will kena watchlist.
NOL is expected to be profitable this year. While gearing is a concern, most cash outlay were made last 2 years while NOL will take final delivery of last order of 10 ships this FY. CEO remarked no order beyond FY14. Unlikely to raise cash though rights issue due to price below book value.
Officials of NOL said they are seeing promising pockets of demand in the market. Started to see stronger than anticipated volumes in all major trade lanes (recently).
MayBank most bearish with TP $1 and Barclay with equal weight TP $1.07 while Citi is initiating coverage with a Buy Call and TP $1.17
Mike King, Special Correspondent | Mar 05, 2014 6:35PM EST
print
6 0 2 11
APL India at berthAPL India at berth.
NOL Group will return to profit this year by concentrating on its core Transpacific business and reaping the benefits of its sizeable port holdings, according to one equity analyst firm.
NOL posted a full-year loss of $76 million in 2013, compared with a $412 million loss in 2012, in part due to the improve performance of APL, its container shipping business.
Drewry Maritime Equity Research said NOL’s third consecutive annual loss in 2013 was triggered by weak freight rate market conditions and high fixed costs. However, the equity analyst now believes NOL is now in a better position to return to profitability due to its focus on the trans-Pacific trade — from which 50 percent of its liner revenue is generated — and ongoing efforts to lower its cost base.
“We expect both operating margins and return on equity to recover from historical lows in FY14 and continue on an upward trend in FY15,” said Drewry analyst Rahul Kapoor. “NOL continues to cut its costs significantly and plans to move ahead in this direction in the coming years.”
By focusing on the trans-Pacific trade NOL is also lowering its risk from Asia-Europe, according to Rajat Gupta, also an analyst at Drewry. “U.S. economic data continues to surprise positively, raising market optimism on trade recovery,” she said. “The upcoming trans-Pacific contracting is a key event for both freight and volume development and will in all earnest decide the company’s financial performance in FY14.”
Drewry also rates APL Terminals as NOL’s “hidden gem” due to it being clubbed under “Liners” in financial statements even though it generated some 7 percent of total revenue last year and is ranked 15th on the list of global terminal operators.
“APL Terminals is a major source of income and value to the group,” Kapoor said. “We argue that APL Terminals remains a hidden gem in NOL’s asset portfolio and an opportune divestment of terminal assets even while retaining control will potentially unlock and add tremendous value for shareholders.”
DEUTSCHE BANK view : We met with NOL at our conference.
We continue to be concerned about the oncoming supply of
newbuild vessels into the industry, which we think will prevent the company
from quickly returning to ROE levels above their COE. We see downside risk to
consensus earnings forecast, and material downside to our target price: Sell.
NextInsight
a hub for serious investors
