UOBKayhian on 31 Oct 2013
(NOL SP/BUY/S$1.06/Target: S$1.30)
FY13F PE (x): 95.1
FY14F PE (x): 11.2
Net profit recorded during weak market. Neptune Orient Lines’ (NOL) revenue declined 10% yoy in 3Q13 and 7% yoy in 9M13 to US$2.1b and US$6.5b respectively, due to the lower freight as well as shipping volume. The net profit was US$20m (-60% yoy) in 3Q13 and US$61m in 9M13, vs net loss of US$321m in 9M12.
Maintain BUY and target price of S$1.30. We expect NOL's earnings will improve on its improved efficiency by optimising its AE fleet. Besides, as a premium TP carrier with more than 95% exposure to TP contractual cargo, NOL is relatively defensive until the cycle turns.
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