Macquarie downgrades NOL to underperform
Macquarie downgraded Singapore container shipping firm Neptune Orient Lines (NOL) to 'underperform' from 'neutral' and lowered its target price to S$0.95 from S$1.08, as it saw persistent oversupply of capacity in 2013, Reuters reports.
NOL shares were down 1.3 percent at S$1.17 on Tuesday. The stock has risen 4 percent so far this year, underperforming the 16 percent gain in the Straits Times Index.
"We believe there are more downside risks to freight rates, and the market is placing too much faith in carriers' ability to hold down supply," Macquarie said, adding that supply growth will accelerate to 7.8 percent in 2013 from 7.3 percent in 2012.
Macquarie said it saw no reason to own NOL stock at a 2012 fiscal year price-to-book of 1.0 time, but advised investors to revisit NOL in the second half of 2013 as it gets more evidence of the company's success in cutting costs and improved supply-demand balance in 2014.