Kim Eng Securities News

CMA CGM has finally made its all-cash voluntary conditional general offer for all the outstanding shares of Neptune Orient Lines (NOL). This follows approvals by the relevant regulatory authorities in the European Union and China. The offer price is SGD 1.30 in cash per NOL share, which CMA CGM called a fair value and an offer that the company does not intend to increase. Acceptance of the offer is due by July 4, 2016. CMA CGM currently owns 10.5% of all NOL shares, and intends to delist and privatise NOL through the Offer. NOL’s majority shareholders (Temasek Holdings (Private) Limited and its affiliates), which own 66.78% of all NOL shares, will tender all of their NOL shares in acceptance of the Offer.

Shares of Singapore shipping and logistics firm Neptune Orient Lines (NOL) rose 7.5 percent on Tuesday, buoyed by its deal to buy U.S.-based GATX Logistics for $210.5 million in cash. "They (NOL) have always said logistics is going to be a growth area for them. So, having made a significant acquisition, people tend to look at it positively because they are moving in the right direction," said Seah Hiang Hong, head of research at Kim Eng Securities. NOL said the acquisition would boost revenues for the group's unit APL Logistics -- the vehicle used to buy GATX -- by 70 percent or more than $300 million. GATX, owned by GATX Corp. until last June, is the second largest warehouse-based contract logistic company in the United States with about 21 million sq ft of warehousing space.

SembCorp Marine, Singapore's largest ship repairer, is expected to post a modest rise in 2000 earnings, boosted mainly by gains from divestment of a small technology company. SembCorp Marine, a unit of government-linked SembCorp Industries with a market value of about S$1.1 billion ($630 million), is due to report its earnings on Tuesday. Analysts said they expected SembCorp Marine to fare much better than its smaller rival Keppel Hitachi, which reported a 50 percent slide in 2000 earnings due to a weak ship repair market. "SembCorp Marine has a lot more long-term contracts with customers like NOL (Neptune Orient Lines), so that has helped them," said an analyst at Kim Eng Securities. The analyst is forecasting a four percent rise in net profit to S$82.1 million from S$79 million in 1999.

Shares of Cosco Corp. Singapore, a shipping company that owns a shipyard in China, rebounded after announcing it secured an order to build 29 bulk carriers worth $1.34b. The news has provided the stock a much needed shot in the arm as investors have been selling the stock in the last two days on concerns its shareholder, shipyard operator SembCorp Marine Ltd., may sell more shares in the company. SembCorp Marine said it had sold 39 million Cosco shares, taking its holding to 111.4 million shares. The latest orders put Cosco's current order book at $6.4b, $6.2b of which were secured this year, according to Kim Eng Securities. The brokerage believes Cosco could secure another $900m in orders based on existing options with customers.

Singapore's two ship-repair yards, Keppel Hitachi Zosen Ltd. and SembCorp Marine Ltd., are expected to report modest profit growth after almost two years of restructuring and consolidation. Keppel Hitachi Zosen was expected to turn in profit of about S$33 million for 1999 after a S$65 million loss for the nine months ended December 1998, analysts said. SembCorp Marine, due to release results today (Feb. 14), should post a 10 percent rise in earnings of between S$78 million and S$80 million against 1998 profit of S$71.81 million. Squeezed by rising land and wage costs, Singapore's shipyard industry underwent a consolidation in 1997 and 1998 that saw the city state's main players reduced to two from four.

Shares of Neptune Orient Lines Ltd (NOL), the world's sixth largest container shipper, sank as much as 2.5 percent on Thursday morning to their lowest level since March 2000 on freight rate concerns. By the midday break, NOL had crawled back to S$1.20, down one cent, from S$1.18 in moderate trade of 2.78 million shares. Analysts said there were increased worries for its earnings due to prolonged pressure in freight rates with no short-term recovery in sight for cargo demand due to slowing economies. "People are concerned over pressures in freight rates," said Albert Goh, an analyst at Kim Eng Securities. NOL scrapped a planned share flotation and U.S. listing of its oil transportation unit last month.