NOL - To continue on its uptrend

NOL - No Carrier to be Under-Utilized

24 Jun 10

Macquarie Note With the global economic recession starting to lift, major shipping companies operating the world's merchant marine fleet have started to show some signs of recovery and growth. NOL’s recent report on its operating performance certainly validates that. The TSA’s statement at the start of the week however, signals for even better times ahead…

“No carrier to be under-utilized and at non-compensatory rates” A.P. Moeller-Maersk A/S and 14 other container-shipping lines including NOL, expect sustained demand on Asia-U.S. routes after rebounding consumer spending spurred a 24 percent traffic rise to U.S. west coast ports last month. “Carriers are now seeing a strong peak-season surge that could last for some months,” Kim Young-Min, head of the Transpacific Stabilization Agreement (TSA) shipping group said in a statement on June 21. He added that “after last year, no carrier is going back to operating vessels underutilized and at non-compensatory rates.” First-quarter container volumes on Asia-U.S. routes jumped about 13 percent from a year earlier to 1.27 million 40-foot boxes, the TSA said. The tally however, is still below 2008 levels. NOL’s sees strong operating performance Meanwhile, NOL published their operating performing during the four weeks ending May 28 2010 on the same day the TSA released their statement above on June 21.  The report showed that average freight rates jumped 19 percent compared to the same period last year – its biggest increase in more than six years. The company also transported 34 percent more cargo. Share price performance On the day of the release of the above-mentioned operating performance (announced on the SGX after market), NOL’s share price had jumped 1.5% to $2.10 on June 21 – its highest since May 14. While the stock has since come off slightly to its last traded share price of $2.02, June remains a good month for NOL with the stock recovering 5% from its sell-off in May. It is still however, trading 12% below its recent high of $2.30 in April.

ML's take:

Believe this counter still have some upside to go, after the consolidation over the past 3 days. $2.0 looks like support with $2.12/13 the key resistance to break.

Fundamentally, I think the container shortage for the US route should be rectify within 2 to 3 months as more idle ships come on stream. Hence shippers are certainly playing up the hype in recent days, amid the renewal of US route contract, giving shipping counters the much needed lift.

Hence, very much a short term to mid term play. Not for long term holding.



This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broking firm. To contact him, please email: icewolfmike@gmail.com