Friday, April 20, 2012
NOL: Daiwa initiates NOL atat Buy with $1.58 TP. Note that NOL is well-positioned to take advantage of the recovery in transpacific freight rates, and believe it will return to profit earlier than the market expects. Expects a 2012 return to profit, and record sharp 2013-14 net profit growth. It forecasts NOL's 2012 transpacific revenue to rise 8% on-year, after 2011's 7% decline; it expects the logistics business' positive contribution to continue, benefiting from a U.S. trade recovery; it notes the logistics business accounts for about 15% of revenue, with two-thirds currently in the US. Doesn't expect NOL to achieve its aggressive US$500m 2012 cost-cut plan, forecasting only US$300m of cuts, mainly on lower operating lease expenses. It believes higher bunker prices will make cost cuts more difficult. It estimates the stock at an undemanding 1.0X 2012 PBR. The stock is flat at $1.275.