NOL’s profit estimates for 2011 sink 73%

Blame it on continuous freight rate deterioration, says DBS.

DBS’ EPS estimates are now 67% and 54% below consensus, but they expect further downgrades from the street in coming months.

Here’s more:

Market share wars lead to freight rate weakness. The container-shipping sector has experienced mid-cycle correction YTD in 2011, with continuous freight rate deterioration as a result of accelerating newbuild delivery and carrier indiscipline amid the seasonal low demand as well as
increasing risks on the macro front.

Expect losses for NOL in 2Q11. The annual Transpacific rate negotiations will likely result in flat or slightly lower rates and there is no sign yet of a peak-seas driven volume recovery either. 2Q11 will likely be another loss-making quarter for NOL, as well as the industry at large, and though 3Q11 earnings should benefit from peak season surcharges, visibility remains poor at this point.

As such, we revised down our existing freight rate assumptions and cut our FY11/12 earnings estimates by 73% and 51%, respectively. Our EPS estimates are now 67% and 54% below consensus, but we expect further downgrades from the street in coming months.

Downgrade to Fully Valued; risks remain. NOL’s share price has declined sharply YTD in 2011 (-30%) and has underperformed the broad market as well as most of its peers. While NOL is trading close to book value currently, based on previous downturns, we feel that there could be further downside to levels of about 0.8x P/BV, which is also 1 S.D. below mean.

To recall, NOL’s valuation had tested lows of 0.4x during the recent shipping crisis in 2009. Given that 2Q11 will probably be another loss making quarter and further visibility is limited, we downgrade the stock to Fully Valued at a lower TP of S$1.25, based on 0.8x P/BV

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia

Top News

'Christian Horner: Unfiltered' Comes to Singapore During F1 Week

The former Oracle Red Bull Racing Team Principal headlines a one-night-only live conversation on leadership, team culture and life at the pinnacle of Formula 1

Leisure & Entertainment

2 hours ago

SC Capital acquires townhouse compound in Chung Hom Kok, Hong Kong