Neptune Orient Lines (NOL)

[mobo]

The crux of the issue isn’t over whether selling or listing the logistics unit is smarter. That is just debating on the optimal way of arranging the deck chairs while the Titanic is sinking. It is the similar inconsequential debate over the sale of NOL building all over again.

Unlocking capital only works as a turnaround if the manager needs the capital to implement certain business restructurings to stem the bleeding or to deploy them into new business ventures. Without a proper game plan, whatever capital raised will be sucked back into working capital beast again.

While a Temasek led bailout is undoubtedly good for management, that would likely devastate existing minority shareholders. I feel a lot of NOL investors are confusing the concept between NOL (The Group) being government backed with NOL (The Shares) being government backed. Citibank might be too big to fail, but that doesn’t mean Citibank shareholders are too big to fail.

My advice to anyone thinking of vesting in NOL: buy or hold them because you have made an informed conclusion that the business will recover, not because of a vague notion that the government will not let it go belly up.