NOL

Street View on NOL ranges a wide spectrum, with some houses trying to call bottom and a turn ard in the industry, while others still see further downside. Deutsche notably, note that the mkt has been taking too pessimistic a view on NOL, without giving it any credit for YTD rate rises, erasing the stock's gains since Dec. The house notes, the recent 1Q12 results don't really reflect the industry's rate increases in Mar, but they will be more evident in 2Q. UOB Kay Hian meanwhile note that carriers’ attempt to raise Asia-Europe (AE) rates by US$400/TEU effective from 1 May has partially failed. According to Shanghai Shipping Exchange, AE rates were US$1,934/TEU (+2.4% wow, +110.4% yoy), implying an increase of only US$200/TEU. For transpacific (TP) trade lane, some carriers will be delaying rate increase of US$500/FEU, which was initially planned to take effect on 15 May. Slot utlisation for two routes has started to show weakness, softening to 85% and 90% for the AE and TP routes respectively. The non-agricultural employment for April in the US was also highly disappointing. Overall, we note that despite the rate increases, mgt expects 2Q performance to be weak (interprets to mean NOL is struggling to break even) because of higher fuel costs, although oil prices has corrected by abt 10% since the resurgence of the recent EU crisis (baring any unforeseen circumstances in Mena) Mkt has an average TP of $1.28 on counter with a wide range of Buy, Hold and Sell Calls.