NOL

NOL: CS has pre-earnings preview, with the house maintaining its UnderPerform Call with $0.95 TP. Note that NOL is scheduled to release its 1Q13 results next Tuesday, with house expecting a pre-ex loss of $41m. This excludes a US$195 m gain on its HQ building sale. House anticipate slightly improved performance with a growth of 2% in liner volumes and 1% in rates, which should combine with a doubling of logistics contributions and 12%+ declines in bunker prices to support performance, although this is expected to NOL’s eighth pre-ex loss in the last nine reporting seasons. Overall, continue to take a dim view of the liner segment and – while NOL should enjoy better rates on its key T/Pac route once contracts reset from the end of this month, the current spot erosion is likely to limit these, while other lanes remain pressured. Continue to view NOL as over-valued relative to its rates of return and vulnerable to the anticipated deterioration of freight rates in the face of excess supply.