NOL

NOL: OCBC downgrade to HOLD in light of weaker than expected freight rates and poorer industry-wide action on capacity management. According to the SCFI, average freight rates have declined by more than 13% QoQ as compared to an increase over the same period last year. This downward trend could reduce the impact of the upcoming general rate hike on 1 Jul – enacted by the Transpacific Stabilisation Agreement – unless greater effort on reducing capacity is undertaken by carriers ahead of the peak-season. While the low-fuel cost environment and ongoing cost-saving initiatives will benefit NOL, house lower forecasts in anticipation of a slightly disappointing peak season. Lowering P/B peg to 1.1x (1.3x previously), fair value estimate falls to $1.17.