NOL

NOL: CIMB reduces its profit forecasts for NOL due to the very weak spot rates in 2Q13, which are below 2Q12 levels for the Asia-Europe and transpacific trades, and TP annual contracts were likely renewed at flat levels. This is offset by the group's cost reduction efforts, as the mgmt indicated that it is likely to perform better in 2013 than in 2012. NOL will take delivery of 14 new vessels this year and 10 next year, while at the same time return 31 high-cost charters over 2013-14. This will lower its structural costs. Separately, with a large number of carriers announcing general rate increases (GRI) from 1 Jul, and with rates reaching desperate levels, there is a high chance of spot rates rising, but sustainability is still a question mark. NOL has an UNDERPERFORM rating with TP of $1.10, based on a 1.1x P/B valuation.