Neptune Orient Lines (NOL)

(31-03-2012, 02:42 PM)Temperament Wrote: NOL has postponed the issue of perpetual capital securities saying due to "unfavarouble market conditions or rather favorable market feedback". Ha! Ha! The collective wisdom of MR. MARKET is working after all. IMHO.
MISCELLANEOUS :: PROPOSED ISSUANCE OF the SINGAPORE DOLLAR-DENOMINATED PERPETUAL CAPITAL SECURITIES

Actually i am "losing out" but i always favour and respect Mr market's wisdom.
Vested 5 lots.

It seems like NOL is a big danger to hold on even if you are vested in 5 lots. It bleeds cash non-stop, it has huge capex, if the global economy doesnt show improvement in the next 2-3 years, it will probably have to raise rights again.. Low upside, large downside, not worth the bet

Container ships are over supplied and under utilised, and containers shippers probably going to have worse results in 2012. NOL will need more cash to tied over 2012 or face bankruptcy. Also its vessel are stated at cost, while the asset market value is lower. High risk as recently some Indo shippers have already defaulted on their loans. Feels like a rotting zombie that feeds on cash.

If you love shipping stocks, try LNG shippers like Golar LNG and Teekay LNG. They will be having great years ahead as US begins its journey as a LNG exporter. The shortage of LNG vessel is so acute that day rates have climbed from $37k a day in 2010 to $150k a day in 2012.

Extract from SGX.com.sg.

"NEPTUNE ORIENT LINES LIMITED
(Company Registration No. 196800632D)
(Incorporated in Singapore on 30 December 1968)
ISSUE OF S$400,000,000 4.25 PER CENT. NOTES DUE 2017
UNDER NEPTUNE ORIENT LINES LIMITED’S US$1,500,000,000 EURO MEDIUM TERM
NOTE PROGRAMME (THE “PROGRAMME”)
Further to its announcement dated 18 April 2012, Neptune Orient Lines Limited (the “Company”)
wishes to announce that the Company has issued S$400,000,000 Fixed Rate Notes due 2017
(the “Notes”) on 26 April 2012.
The Notes will mature on 26 April 2017 and bear a fixed interest rate of 4.25 per cent. per annum
payable semi-annually in arrear.
Approval in-principle has been granted by the Singapore Exchange Securities Trading Limited
(the “SGX-ST”) for the listing and quotation of the Notes on the SGX-ST. Admission to the Official
List of the SGX-ST and quotation of the Notes on the SGX-ST is not to be taken as an indication
of the merits of the Company, its subsidiaries and/or associated companies, the Programme or
the Notes. The Notes are expected to be listed on the SGX-ST on 27 April 2012.
BY ORDER OF THE BOARD"
Looi Lee

Unquote:
NOL after not sucessful in issuing Perpetual Bonds to the market, goes back to the above usual "MTN" program. Nol is our "National Shipping Line" not a public or private company.
If not i think long ago NOL would have changed hands or disappear into oblivion. No?
So those who think so or brave enough should buy some if it goes below $1.0

The Straits Times
May 10, 2012
Container shipping firm sinks deeper into the red
Firm to restructure as it marks fifth straight quarter of losses

By Yasmine Yahya

CONTAINER shipping firm Neptune Orient Lines (NOL) has posted yet another quarter of losses, as its new cost-cutting regime fails to stem the bleeding caused by high fuel costs and low freight rates.

With the global shipping industry mired in gloom, NOL has sunk far deeper into the red, recording a net loss of US$254 million (S$319 million) in the first quarter ended April 6.

This is a major blowout from the US$10 million loss in the same period last year, and marks the fifth straight quarter of losses for the firm.

NOL managed to trim US$100 million from its spending between February and April, and said it is on track to save US$500 million in total this year, by cutting down on fuel consumption and having a leaner operational budget.

It is also undertaking an organisational restructuring that will result in additional annual savings of about US$70 million from next year onwards, the firm said in a statement.

'There were positive signs in the first quarter - the freight rate increases in March and growth in the logistics business,' said chief executive Ng Yat Chung. 'But we must continue to aggressively manage our operating costs, and streamline our organisation for greater efficiency.'

NOL's group revenue in the first quarter slipped 3 per cent from a year earlier to US$2.38 billion.

Revenue fell 4 per cent in its liner shipping business, APL, and pre-tax losses deepened to US$246 million despite higher volumes on the intra-Asia and Latin American trade routes, as freight rates remained suppressed by the sheer number of ships plying the seas.

'Rates have been moving up since March, but not yet enough to offset the high cost of fuel,' said APL president Kenneth Glenn. 'Much more remains to be done to increase rates and manage down expenses.'

In the first quarter, APL mitigated its losses by reducing fuel consumption by 75,000 tonnes, even though overall cargo volume increased 4 per cent in the same period.

NOL's container logistics business, APL Logistics, fared slightly better, with revenue rising 7 per cent in the quarter to US$394 million with strong demand for rail- and land-based services from automotive customers.

APL Logistics' core pre-tax earnings fell 38 per cent from a year ago due to higher operating and technology costs incurred from investments in growth strategies, but it still remained profitable, taking in US$13 million.

'We increased revenue and sustained profitability despite economic uncertainty in key markets,' said APL Logistics president Jim McAdam. 'Our emphasis remains on investing for profitable growth.'

Last month, NOL raised S$400 million by selling five-year bonds to fund the expansion of its logistics business. It had sounded a cautious tone about the year ahead, citing an uncertain global economic outlook, high fuel costs and overcapacity in the shipping sector.

The entire shipping industry has been hit hard by the weak global economy, with a KPMG survey of shipping executives showing that most believed a recovery could be five years away.

In its latest annual report, NOL said its strategy for dealing with the challenges ahead is to modernise its fleet with large and efficient ships that cost less to operate. The group also plans to centralise its operations in lower-cost locations such as Chongqing in China, Malaysia's Kuala Lumpur and Costa Rica.

NOL ended 5.5 cents lower at $1.16.

yasminey@sph.com.sg

NOL is always behaving in this manner of "Boom/Bust/Boom/Bust......kind of business. In fact almost all shipping businesses cannot escape this type of business cycles. People who loves and believes in this quotation “A crisis is an opportunity riding the dangerous wind” will usually thrive. For NOL as long as it remains as our Singapore's National Shipping Line", you can treat it as an "investment in crisis" IMO.
"Caveat Emptor"

By the way, almost everyone of us has faced some sort of "life crisis" and still posting in this forum means everything is still O. K. No?

(27-04-2012, 10:39 PM)Temperament Wrote: Extract from SGX.com.sg.

"NEPTUNE ORIENT LINES LIMITED

...

Unquote:
NOL after not sucessful in issuing Perpetual Bonds to the market, goes back to the above usual "MTN" program. Nol is our "National Shipping Line" not a public or private company.
If not i think long ago NOL would have changed hands or disappear into oblivion. No?
So those who think so or brave enough should buy some if it goes below $1.0

Even if NOL goes below 50 cents, do not buy too. It is a company that during good times couldnt clear off its large debt. And during bad times like now, it has to take on debt to sustain itself.

Dont you feel that it is somewhat like greece?

If you intend to buy NOL, wait till it restructures its debt or after it has done a rights issue to reduce its debt. Avoid NOL, go for simpler stocks like Singpost, M1, etc..

Warren Buffett once remarked that "paradoxically, when dumb money realizes its limitations, it ceases to be dumb"

(10-05-2012, 08:59 AM)money Wrote:

(27-04-2012, 10:39 PM)Temperament Wrote: Extract from SGX.com.sg.

"NEPTUNE ORIENT LINES LIMITED

...

Unquote:
NOL after not sucessful in issuing Perpetual Bonds to the market, goes back to the above usual "MTN" program. Nol is our "National Shipping Line" not a public or private company.
If not i think long ago NOL would have changed hands or disappear into oblivion. No?
So those who think so or brave enough should buy some if it goes below $1.0

Even if NOL goes below 50 cents, do not buy too. It is a company that during good times couldnt clear off its large debt. And during bad times like now, it has to take on debt to sustain itself.

Dont you feel that it is somewhat like greece?

If you intend to buy NOL, wait till it restructures its debt or after it has done a rights issue to reduce its debt. Avoid NOL, go for simpler stocks like Singpost, M1, etc..

Warren Buffett once remarked that "paradoxically, when dumb money realizes its limitations, it ceases to be dumb"

i think NOL historical lowest price did go below 50 cents. So what is the price today? Can still make money or not?
This counter is definitely for people who believes in crisis investment only. Or people with "casino instinct". i remembered i was crazy trading NOL@70 cents during SEPT 11 2001. i was a naive, much, much more younger investor then. When you are young, you are usually more "carefree or careless in your judgement or thinking. i think i was "saved" because it's our National Shipping Line. If ever PAPY thinks Singapore can outsource this operation, is the day NOL will die. No?
"Caveat Emptor"

(10-05-2012, 08:51 AM)Temperament Wrote: NOL is always behaving in this manner of "Boom/Bust/Boom/Bust......kind of business. In fact almost all shipping businesses cannot escape this type of business cycles. People who loves and believes in this quotation “A crisis is an opportunity riding the dangerous wind” will usually thrive. For NOL as long as it remains as our Singapore's National Shipping Line", you can treat it as an "investment in crisis" IMO.
"Caveat Emptor"

By the way, almost everyone of us has faced some sort of "life crisis" and still posting in this forum means everything is still O. K. No?

Waiting for a right entry point to add on to my existing holding.....

NOL certainly looks interesting from the perspective of those who wish to "catch the cycle" so to speak. But ultimately, when you cannot value a company based on earnings, and book value is being impaired even as we speak, it makes it very difficult to justify an investment thesis.

Investment would ultimately degenerate into mindless speculation once we cannot obtain a logical and objective rationale for purchasing shares in a company.

If the business stays like now for any longer, NOL must raise money from equity market, otherwise, it will slowly bleed to death. Soon, debt market could be closed for NOL even with Temasek backing.