NOL

NOL: reported a poor 4Q13 albeit in line with expectations, as its net loss deepened to US$137.2m from US$91.1m a year ago. Revenue dipped 7% y/y to US$2.3b, driven by an 8% decline in freight rates. For the full year, NOL’s revenue similarly declined by 7% to US$8.8b, while its net loss shrank sharply to US$76.3m from US$412.5m in FY12, aided by a one-off gain of US$200m from the sale of NOL Building during the year. Cost savings of US$470m for the year also led to an improvement in underlying performance, and helped to reduce operating cost per box by 8% y/y. While ongoing delivery of larger vessels to NOL’s fleet will the group improve its cost structure, overcapacity and depressed freight rates remain the key overhang on the sector. Management expects the challenging industry conditions to continue. Valuations at 1x P/B are not expensive, but the street sees little prospects for a near term earnings driven recovery. Latest broker ratings: Maybank-KE maintains Hold with TP $1 Deutsche maintains Hold with TP $1 HSBC maintains Underweight with TP $0.90