NOL: Samsung Securities initiates coverage at Buy with TP $1.50, based on 1X P/B. Says " NOL will be one of the names most positively affected by the short-term change in sentiment towards the liner sector, which we expect to begin early next year as capacity exits the system, due to its liquidity, profile, and link to the Spore govt."
Says NOL has increased exposure to growing intra-Asian trade lanes, though it still generates more than 50% of revenue from Transpacific routes " Thus, the company should benefit from any pop in rates resulting from upcoming capacity constraints, for which we see mounting evidence."
Longer term, Samsung estimates that NOL's fleet replacement program and its capacity flexibility should drive unit cost base down by around 15%. Adds, NOL's logistics operations should expand its 15% revenue contribution " and enjoy margin expansion as 2011's growth-related investments in the business platform bear fruit."
NOL shares outperform, up 3.5% at $1.04.