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.
GK Goh analyst Masya Spek downgraded the shipping group to sell on Tuesday on expectations of further downside to earnings, two weeks after the brokerage reduced NOL to hold from buy.
Spek said NOL was reluctant to run off leases and cut back its fleet despite lower than expected volumes on concerns that it might not be able to get back capacity when the market turned.
With global traffic on all routes weak, NOL was not deriving much benefit from its diversified trade and route management, she said. "We expect the stock to be sold down as expectations were further lowered. We would look to re-enter the stock at around S$0.80," Spek said in a research note. - (Reuters)