Maybank Kim Eng Research, July 8
FOLLOWING a change of analyst, we assume coverage of Neptune Orient Lines with a target price of $1.25 based on 1.1 times FY2013-14 estimated book value of equity per share (long-term average: 1.2 times). Fundamentally, we believe that the container shipping industry is near its cyclical trough and expect better times ahead as the supply overhang improves over the next few years.
However, we remain cautious in our recommendation as the prospect of a third consecutive year of losses (on our estimates) will likely weigh on sentiment towards the stock. Furthermore, we believe consensus expectations of a profitable FY2013 will be missed.
HOLD
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