Neptune Orient Lines - OCBC Investment 2015-11-09: NOL in preliminary discussions with potential acquirers

Neptune Orient Lines - OCBC Investmente 2015-11-09: NOL in preliminary discussions with potential acquirers NOL NEPTUNE ORIENT LINES LIMITED N03.SI 

Neptune Orient Lines: NOL in preliminary discussions with potential acquirers 

  • Bloomberg reported last Friday that France’s CMA CGM SA and Denmark’s A.P. Moeller-Maersk A/S are in talks to acquire NOL, as majority shareholder Temasek seeks to divest its 66.97%. 
  • Subsequently, NOL confirmed on 7 Nov that it is in preliminary discussions with both reported parties, on the potential acquisition of NOL but noted that there is no assurance that any such discussions will result in any definitive agreement or transaction and will make announcements appropriately. 
  • In our view, we believe Temasek may be unwilling to sell its stake given the current low valuations in the industry (Hapag-Lloyd AG’s IPO on 6 Nov priced at a low ~0.5x P/B). Note that NOL’s current book value as at end-3Q15 is ~S$1.38. 
  • However, taking into account its past dividends and return of capital amount received, there may still be a possibility that Temasek is only willing to sell at a valuation of at least 0.8x 3Q15 P/B (~S$1.10). 
  • With no confirmation of sale of its stake in NOL and no further details on the terms of the offer, we keep our forecasts unchanged. 
  • Currently, based on fundamentals and looking at the muted outlook of the shipping industry, we have a HOLD rating on NOL, with FV of S$0.96.

Eugene Chua OCBC Securities | http://www.ocbcresearch.com/ 2015-11-09
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 0.96 Same 0.96