Thursday, August 18, 2011


NOL: Maersk issues a more cautious outlook for the full year, forecasts its container unit will have a "modest" profit this yr vs a May prediction of a "satisfactory" profit. Warns that freight rates are falling due to overcapacity and it is unclear when they will recover. Says "the shipping market has been difficult, due to growing capacity, and we expect the slow economic growth and market volatility to continue for the coming quarters".

Maersk reported 1H freight rates that were 8% yoy lower on avg, excluding fuel surcharges. The co’s container activities generated net income of 2.09b kroner in 1H, -70% yoy.

Negative comments from the market leader point to further headwinds for the industry. While NOL’s valuation is cheap at 0.8x P/B, lack of catalysts and negative sentiment may put a cap on share price in the near term. Resistance at $1.32 (20 day MA), support at the psychological $1 level.

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