Wednesday, August 20, 2014


NOL: According to Reuters, NOL could be looking to sell its logistics division, with plans to fetch a sale price of more than $750m, and has reportedly appointed banks to assist with the sale. As a guide, the logistics business accounted for 18% of NOL’s FY13 revenue. A stake sale of $750 to $900m would price its logistics business at 10x - 12x earnings before interest, taxes depreciation and amortization (EBITDA), although sources said that buyers were more likely to value the logistics business closer to $600m. We caution however that NOL has just released a statement on SGX, highlighting that the considerations mentioned by Reuters are preliminary and exploratory in nature, and there is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded. Shareholders and prospective investors are therefore advised to exercise caution when dealing in NOL shares and its other securities. The group will release further announcements as and when there are any material developments. In NOL’s recent 2Q14 results, the group stayed in the red for its third consecutive quarter, as net loss widened 55% y/y to US$53.7m (1Q14: -$97.9m). Nevertheless, core EBIT loss improved 52% y/y to US$15m, thanks to cost savings of US$115m. Revenue dipped 1% to US$2.05b on the back of a 6% drop in volume. Going forward, Maybank-KE expects further cost-structure improvements as more chartered vessels are returned upon expiry (2H14: 6, 2015: 14). NOL took delivery of its last vessel on order in 1H and currently does not intend to order more. NOL currently trades at 1.06x P/B. Overall, the street has 3 Buy, 9 Hold and 6 Sell ratings with a consensus TP of $0.95.

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