NOL

NOL: OCBC maintains Buy with $1.38 TP. House note that the Shanghai Containerised Freight Index has exhibited relative stability since the start of the year, and this should provide a good base for upcoming generate rate increases such as those enacted under the TSA for Apr. Although there is a possibility of a supply outpacing demand, several liners have expressed confidence in the resilience of rates this year and continue to push through GRIs beyond Apr. Nonetheless, the major liners acknowledge potential threats to profitability and have reiterated the need for the industry to strike a balance between competition and sustainability. Although some liners have taken heed – such as the G6 and CKYH alliances who have cancelled their planned Asia-Europe service launches this year, there remains some routes that are particularly susceptible to rate fluctuations, and house adjust estimates downwards for NOL accordingly. Regardless of this adjustment, view on NOL’s turnaround in FY13 remains intact and maintain BUY rating.