Neptune Orient L Rg   

NOL

Still on downtrend.... stay out..

 

On a strong and sustained downtrend now.

 

NOL up the lorrie already....
can't help it....

 

ya another Titanic episode has begin...

 

boat is sinking....

 

It was lower after reporting that the average freight rate from Aug 26 to Sept 22 fell 10% yoy to US$2,658 per FEU, offsetting the 6% rise in freight volumes to 166,800 FEUs.



NOL's average freight rates had been falling for the past seven months amid rising cargo capacity and as shipping lines take delivery of bigger and newer vessels.

 

No surprise on period 9 operating performance.
Same old story, volume increase by 6% but revenue is reducing by 10%.Business hard to do this day, tomorrow should be another slump day for NOL.

 

Over capacity is what shipping industrial is suffering now!!
knew this long ago when I started to invest in NOL when it reach it peak mid-yrs of 2005...

got a few chance to cut lost biginning of 2006 but due to greed didn't make it... ok now waiting for the push factor from falling oil prices =)

Thx Nos

 

Hi YongJiu,



There's over capacity in ships. Consensus expectations of freight rates are now of a turnaround in 2009. Long term, this counter is down. Short term, it would rise on falling oil prices. It has always traded at low PEs, so this is not really a factor.



JP Morgan reiterated its "neutral" rating on the stock, with a price target of $2.30.

 

   Technically, NOL's chart does not look good now.

    It broke out of a double bottom formation at $2.06 on 4 Oct. That gave it a potential to run up to $2.24. It hit $2.23 on 6 Oct but candlestick that day gave a price reversal signal. Today's further decline confirms it. Looks like it will go down further the next few days. Just my reading of the chart for sharing.

 

Hi Nos,

I think there is lot of factor to be consider for this counter.
But nevertheless it still the lower PE big shipping counter with good fundamental.

So I think for Kim Eng to call a "sell"  at $1.34 can really ask them to fly big kite.

 

Hi Nos,

what do you think?
do you think the feight rate will only be recover till 2008?

 

NOL was lower amid persisting worries its earnings may remain weak up to 2008, dealers said.



JP Morgan maintained its "neutral" recommendation on NOL, expecting much weaker earnings from the shipping firm next year and into 2008.



"We have lowered our earnings estimates by 50% in 2007 and 74% in 2008 to reflect likely margin compression," JP Morgan analyst Christopher Gee said in a note.



JP Morgan estimates NOL's core net profit to come in at US$73.8m in 2007, growing to US$115.4m in 2008. This year, it sees net income falling sharply to US$293.9m from US$796.3m in 2005.



Gee said the overall operating cost outlook for the company remains on the rise while "revenue outlook is cloudy through 2007 with oversupply capping freight rates."



"Any sustained share price recovery seems likely only when there is some visibility of a rebound in freight rates (consensus expectations are now of a turnaround in 2009)," he said.

 

super direct relationship
oil price down, profit up

NOL cheong arrrr

 

By Alison Leung 
    HONG KONG, Sept 28 (Reuters) - Asian container shipping firms are under a 
double threat from looming oversupply and a potential economic slowdown in the 
United States -- and lower fuel prices will not rescue them. 
    Asia-to-Europe freight rates have already suffered, falling about 15 percent 
in the first half of this year. Investors fear the slide will spill over to 
trans-Pacific routes -- the world's busiest shipping lanes and the lifeblood of 
Asian operators. 
    Container lines are already the worst performing stocks in the world 
transportation arena in the past year, according to a UBS report. Some say worse 
is yet to come, because for every two carriers afloat, a new one is on order. 
    Supply of new capacity is expected to outpace container volume growth by 3 
percentage points this year and another 2 points in 2007, while orders for new 
ships amount to 52 percent of the world's existing container capacity, 
shipbrokers say. 
    "The expected growth volume (of container business) is still holding up 
pretty well. We still expect double digit growth next year, maybe even the year 
after," said Thomas Preben-Hansen, a director at shipbroker Clarkson Asia. "But 
it's not going to absorb all the capacity which is coming." 
    Eastbound trans-Pacific -- from Asia to the Americas -- accounted for 
between 39 percent and 50 percent of revenues for Singapore's Neptune Orient 
Lines <NEPS.SI>, Hong Kong's Orient Overseas (International) <0316.HK>, South 
Korea's Hanjin Shipping <000700.KS> and China Shipping Container Lines <2866.HK> 
last year, according to Deutsche Bank. 
    Some, like top Chinese shipper China COSCO Holdings <1919.HK>, hope that 
falling oil prices might salve the pain. 
    Benchmark 380-cst bunker fuel prices <BK380-B-SIN> in Singapore eased 21 
percent from a year's high in May to an end-2005 level of about $287 per tonne 
-- but that's still 76 percent above $163 per tonne at the end of 2004. 
    "Benefits from the recent oil price fall cannot offset the freight rate 
decline," said Michael Chan, an analyst at Macquarie Securities. "Next year will 
be the trough of this cycle. But I guess freight rates may not rebound in 2008 
as people hope." 
    Orders for new container ships stood at 1,286 vessels, or 4.65 million 
twenty-foot equivalent units (TEU) in September. About 40 percent of that will 
be delivered this year and in 2007, Clarkson reckons. 
    (For a related FACTBOX, click [ID:nHKG262241]) 
    FROM BOOM TO BUST? 
    Macquarie recommends investors stay away for now. 
    But if you must buy, analysts pick operators with non-pure shipping arms -- 
such as China COSCO, the only major stock still rated "outperform" by 14 
analysts, according to Reuters Estimates. 
    COSCO controls port operator and container leasing firm COSCO Pacific 
<1199.HK>, an asset spread that should help smooth shipping profit declines, 
said Geoffrey Cheng at Daiwa Institute of Research. 
    But Macquarie's Chan added: "The best case scenario is dead money and the 
worst case scenario is down 10-15 percent." 
    Things had been going so well. 
    The highly cyclical industry caught investors off guard as a three-year 
shipping boom, fuelled by growing global trade on the back of strong demand for 
goods made in China, lasted longer than expected, to about the final quarter of 
2005. 
    But high fuel and terminal handling costs sent Taiwan's Evergreen Marine 
Corp. <2603.TW>, the world's number-three container operator, into the red in 
the 2006 second quarter. 
    "Average freight rates should fall about 10 percent this year," said Teo 
Siong Seng, managing director of Singapore's number-two shipping firm, Pacific 
International Lines.

 

I believe oil prices don't have much downside left. It's already near the year low. That's negative for NOL.



It extended losses after it reporting that its average freight rate for the July 29-Aug 25 period fell 9% yoy, dealers said.



Kim Eng said NOL's latest data show that freight rates have fallen for six consecutive months and confirms its "pessimistic earnings outlook" for the company.



"We believe that the trend will last into 2007, where we expect a further 15% of additional container capacity to enter the market and thus continue to depress rates," Kim Eng said in a note.



The brokerage maintains its "sell" call with a price target of $1. 34.

 

NOL is currently either stagnating or on a slight uptrend now.

 

CSFB said it has raised its target price to $1.95 to factor in expectations that earnings in the third quarter will be stronger than the previous quarter, but kept its "neutral" rating on the stock.



"We expect third quarter earnings to be stronger than the second quarter. This should be no surprise, as the third quarter is historically a strong quarter," CSFB said in a note to its clients.



While freight rates continue to ease, demand remains strong as shown by NOL's latest operating statistics, it said.



"We believe freight rates should decline (further) at the end of the fourth quarter and into 2007 owing to excess supply arriving during a traditionally slack demand period," Credit Suisse.



"It is still too early to buy, in our view. Fourth-quarter rate trends are likely to see the sector struggle," it said.

 

Its average freight rates for the July 29 - August 25 period fell 9% to US$2,651 per 40 foot-equivalent unit (FEU.) Freight volumes rose 11% to 171,300 FEUs in the same period.



Year to date, average freight rates were down 6% yoy to US$2,650 per FEU, while freight volumes were up 7% yoy to 1.35 mln FEUs, it said.

 

Average revenue of US$2556/FEU during 6 May and 2 Jun, was the lowest recorded since Q204 when they sank to US$2528/FEU. APL indicated that average freight rates have gained nearly 16% since the low point in May and that they are up 14% from June. Similarly, volumes have grown by nearly 4% since May.