NOL Neptune Orient Lines - No turnaround in near term

We believe container freight rates have not bottomed out yet and are likely to trend lower. Despite cost saving initiatives, we estimate NOL will likely continue to report quarterly losses. With 39% potential downside to our revised price target of S$0.85 (previously S$0.90), we maintain our REDUCE rating.

Freight rates continue to decline? We believe freight rates are set to decline with annual transpacific rates to be concluded more than 10% y-y lower. Further, a return of the global laid-up and idle capacity will likely place further pressure on Asia-Europe and Intra-Asia freight rates.

Leading to quarterly losses to continue: Even before the potential rate decline, we estimate that int'l routes are experiencing losses. Despite NOL's attempts to reduce costs, we believe the company is likely to continue reporting quarterly losses with volumes still significantly lower (although volumes would still improve sequentially this year).

We maintain our REDUCE rating on NOL, as we believe it is too early to call for a trough in container freight rates. In fact, we believe freight rates are under pressure and could decline in the near term, from conclusions of annual transpacific freight rate negotiations (some contract negotiations are still ongoing) and our expectation that shipping lines are unable to impose any peak season surcharges. We expect NOL and other container lines to continue to report quarterly losses as international routes continue to experience losses.

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Swiber - Placement 0f 84m shares at 88 cts

Size: Up to 84,000,000 new shares, (approx 19.9 % of existing share capital)
(Note 30m shares anchored and the balance will be on an accelerated book building process)


In view of the recent rally in the market, the Swiber Management has agreed to price the placement of the 10-day VWAP which works out to a 7.7 % discount to the 10-day VWAP off S$0.9531.This is a 16.2% discount to the last done price of S$1.05.

ASL Marine - Heading lower in the near term

ASL Marine is likely to face more correction pressure in the days aheadfollowing the formation of a bearish engulfing and tweezers top pattern atthe key gap zone resistance level (end Sep ’08).

With the RSI indicator now falling out of the overbought region, coupledwith the MACD and Momentum indicators turning sharply lower with likelybearish crossovers soon, they seem to support our view that the sellingmomentum could persist in the near term.

We expect the correction to find an initial support at $0.685-$0.71 (gap inearly May ’09), failing which, we see the next key support at $0.57 (upperboundary of 6.5-month uptrend channel and resistance-turned-support level)

Immediate resistance is pegged at $0.93 (2009 high), ahead of $1 (support-turned-resistance level).