NOL

NOL - No co specific news, although we recently highlighted that NOL bounced back into the scene today after a foreign broker upgraded the shipping group Buy from Netural and lifted its TP of $1.30 from $1.00.

Echoing other market watches, the house favors container shipping over dry bulk shipping. In particular, container shipping along Transpacific routes are expected to outperform in 2015 in view of the favourable supply-demand outlook and industry structure.

NOL derives ~50% of its revenue from the Transpacific container segment. As such, 2015 could be turning point for the group after four consecutive years of losses.

On balance sheet concerns, the house believes that this will be mitigated by the disposal of APL Logistics for US$1.2b, which will pare its gearing to 100%.

Overall, the broker believes that current valuations are undemanding, with the stock trading at just 0.7x FY15e P/B, well below industry peers.

Separately, Bloomberg highlighted NOL’s appeal as a takeover candidate has increased following the sale of APL Logistics, with analysts adding that now could be a good time to enter into the shipping cycle.

Some sceptics however argued that following the disposal, NOL has become more of an asset buyer than a takeover target, and with the group often viewed as a symbol of Singapore's shipping industry, an exit by Temasek is unlikely.

Overall, ratings by the street suggest that the worst is over for NOL, with 10 Buy and 8 Hold calls and a consensus TP of $1.18.