NOL: DBSV maintains Hold with $1.55 TP. House expect no recovery in freight rates yet as we approach peak season and expect losses to continue in 2Q11, although note that value could be emerging given recent underperformance. Add that annual Transpac rate negotiations will likely result in flat or slightly lower rates and there is no sign yet of a peak-season driven vol recovery either….
2Q11 will likely be another lossmaking qtr for NOL, and industry at large, athough 3Q11 earnings should benefit from peak season surcharges, visibility remains poor at this point. At current prices, NOL is trading close to or below book value, which house feel is near the floor of its trading band, given that huge losses reminiscent of the recent shipping crisis in FY09 are unlikely to be repeated.
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