NOL

NOL/ Container shipping: Nomura issued a sector report, has a BUY on NOL with TP of $1.45, CSCL (HK-listed) and OOIL (HK-listed). Global demand growth forecast for FY13 at 4.2%, vs supply growth at 6.0%; House forecasts an increase of 1.8% for overall freight rates to $1591/ TEU, coming from a 4.7% increase on the Transpacific route. Nomura noted that 4Q12 results disappointed on overall, and is likely to force even tighter capacity discipline. Asia-Europe freight rates should remain volatile with monthly rate increases (before subsequent declines), while transpacific annual contracts will likely be concluded higher y-y. House notes the upcoming catalysts: 15 March rate increases on Asia-Europe of US$750/TEU and 1 April US$400-600/FEU GRI on transpacific. Low margin, slow demand and supply imbalance are forcing capacity management, which underpins Nomura's bullish view on container shipping.