Put up for sale by Temasek?
- An article published last Friday by The Wall Street Journal wrote that, according to people familiar with the situation, Temasek Holdings has put Neptune Orient Lines Ltd (NOL) up for sale.
- It wrote that NOL had been in talks with a prospective buyer with no agreement reached on price.
- Temasek currently owns ~66.97% of NOL, which has a market cap of ~S$2.3b (~US$1.7b) as at market close on 16 Jul.
- Post-divestment of its logistics business in May 15, NOL has become a pure-play container shipping company and we think that it is indeed now more attractive to prospective buyers.
- Recall that Temasek increased its stake in NOL from 30% to 68.6% at S$2.80/share back in 2004.
- In our view, with NOL no longer a key strategic investment as it was 10 years ago when Singapore was still building up the nation as a shipping/trading hub, it does make sense for Temasek to exit its investment in a struggling industry.
- NOL closed on Friday at S$0.875/share, representing ~0.7x FY15F P/B (post-divestment).
- According to Bloomberg, NOL commented that it has neither made any decision nor entered into any agreement for potential sale, as focus remains on returning core liner business to sustainable growth and profitability.
- We currently have a HOLD rating on NOL with a FV estimate of S$1.15 (0.8x FY15F P/B).
(Eugene Chua)
Source: http://www.ocbcresearch.com/
