NOL

NOL: poor 3Q11 results.
Net loss of US$91m in 3Q11, widened from the US$57m in 2Q11. YTD net loss amounted to US$158m.
In 3Q, NOL's revenue/TEU (ie. freight rates) was 19% lower y/y and fuel prices were up 45% y/y. On a q/q basis, average revenue/TEU was down 0.1% q/q, meaning that almost no peak season surcharges were successfully pushed through. However volume was up 6.7% q/q.
The poor results were not surprising given the slew of losses so far being reported by the Chinese and Taiwanese liners in 3Q.

Net gearing edged up from 30% last quarter to 56% at the end of 3Q. Still relatively healthy but not something the company should be complacent about.

Given that 4Q volume is usually weaker than 3Q, downward pressure on rates are likely to persist. Mgt commented that global economic conditions have not improved and expects to report a loss for full year 2011.

NOL is trades at 0.8x FY11E P/B, which is close to the 0.7x trough of the 2008 global financial crisis.
But Deutsche tips not buy the stock until there are clearer signs of a recovery. Keeps Hold rating with TP $1.04.
Credit Suisse keeps at Neutral, lowers TP to $1.20 from $1.23.