NOL

NOL: reports Oct (Period 10) operating data.
Volumes rebounded 5% mom, 13% yoy, mainly due to higher volumes on Intra-Asia.
Rates continued to decline 4% mom, 18% yoy, mainly due to lower rates in the major trade lanes and a higher proportion of Intra-Asia volumes.

Morgan Stanley notes pricing indiscipline, where rates on the key long-haul routes have deteriorated to cash loss levels while volume growth remains relatively robust. Says, despite strong volumes, believes that the ongoing rate deterioration will imply sharp 4Q11 losses (forecasts net loss of US$135m), and could prompt NOL to raise capital to boost its balance sheet.

Separately, Citi notes NOL shares rose 2.9% yday on the back of renewed optimism that freight rates may have bottomed after news of a possible US$400/FEU rate hike in Transpacific. The house says it does not recommend chasing any short-term rally, believes NOL share price may lose the current positive momentum once economic reality sets in. Note that the ability to push through this rate hike hinges on the economic conditions at the time of implementation, as well as further capacity rationalization (ie. service cuts and laid up fleets).
Citi keeps its Sell rating with TP $0.90.