NOL’s share price sinks 50%

DBS says the industry supply-demand gap looks more balanced at this point, compared to the last crisis in 2008-09.

However, relative to the broader STI, NOL share price slid further YTD in 2011 than in 2008, suggesting that NOL may be oversold at these levels.

Here’s more from DBS:

Less downside than 2008 crisis. Compared to the last crisis in 2008-09, we believe the industry supply-demand gap looks more balanced at this point, and there is less downside to current asset values and freight rates than back in ’08. One key concern for NOL now is the higher capital commitments after the 2 recent rounds of new mega vessel orders, which could drive its gearing
up to unsustainable levels. Any prolonged losses in the difficult operating environment could lead to a potential cash call.

However, the 50% YTD share price decline seems to have adequately priced in the negative sentiments associated with the stock as a proxy to slowing world trade/GDP growth.

NOL’s underperformance is steeper this time around. In the first 10 months of 2008, NOL share price had plunged 69%, rather similar to the YTD trend in 2011. However, relative to the broader STI, NOL share price slid further YTD in 2011 than in 2008, suggesting that NOL may be oversold at these levels.

However, we think it is still too early to buy, as economic indicators remain weak and the CCFI freight rate readings remain uninspiring in what is currently supposed to be ‘peak season’. At best, we expect share price to move in line with index, as we saw after the lows of October 2008.

Upgrade to HOLD, given the above conclusions. We maintain our net loss projections of US$126m and US$48m for FY11/12 under our base case scenario, which calls for slower growth in US/ EU but not an outright recession. Our TP of S$1.11 is based on 0.8x P/BV, or 1 SD below mean. In a bear case recessionary scenario, we estimate deeper net losses of US$208m/ US$530m for FY11/ 12, and our bear-case TP of S$0.85 is premised on 0.6x P/BV.

Photo from todaysart

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