OCBC Report 25 Sep 13

Neptune Orient Lines: No peak season surprise
Despite industry wide efforts to push through general rate hikes, freight rates according to the Shanghai Containerised Freight Index show continued softening in Sep instead. With the traditional 3Q peak season weaker than expected and drawing to a close, we are likely to see freight rates subsequently head lower in 4Q13 as demand typically drops off, further affecting the ability of liners to force through rate hikes for the remainder of the year. That said, we are forecasting a much smaller core operating profit for NOL in 3Q13 and another loss-making 4Q13 to end a disappointing 2013. In light of the weaker outlook for 2H13 and beyond, we maintain our SELLon NOL with an unchanged fair value of S$0.95. The lack of any near-term catalyst compels us to keep our P/B peg at 0.9x. (Lim Siyi)

MORE REPORTS

CapitaCommercial Trust: Strengthening its debt profile
CCT reported that it has refinanced committed term loan facilities of an aggregate amount of S$450m and a revolving credit facility of S$100m with various expiry dates in 2014 and 2015. In addition, the trust also secured a new committed revolving credit facility of S$100m. These set of new facilities, with an aggregate amount of S$650m, will expire on maturity dates from 2018 to 2020. S$480m of the new facilities has already been drawn down, with S$450m to refinance the existing facilities and S$30m for capital expenditure and general working capital. We see this as a positive move for CCT which will significantly extend the average maturity of its debt portfolio from 2.8 years as at end 2Q13 by an additional 0.8-1.1 years, according to our estimates. Maintain BUY on CCT with a fair value estimate of S$1.61. (Eli Lee)

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NEWS HEADLINES

- US stocks ended mostly lower, with the Dow and the S&P 500 extending their losing streaks to four days, as a drop in consumer confidence and worries over a Washington debt-ceiling fight outweighed a rise in home prices and easing concerns over the Middle East.

- Property investment sales have crossed S$13b this quarter, roughly double the previous quarter and the strongest showing since Q3 2007.

- Larsen & Toubro Ltd, India's largest engineering company, is considering a Singapore listing for its toll-road projects that could raise about US$700m, said two people with knowledge of the process.

- Geo Energy Resources has struck two deals with Indonesia's coal-mining company PT Parisma Jaya Abadi.

- EMS Energy has received a contract to build a derrick equipment set for a tender-assisted drilling rig for US$36m and expects to secure two more similar-sized deals over the next few months.

- Ley Choon Group Holdings has won four contracts amounting to about S$30.6m, raising its order book to S$233.4m.