“We revise our FY15 net profit forecast from $46m to $203m,” a DBS research report stated.
“The fact that NOL has lagged its peers in terms of fuel efficiency and margins in the past means there is more room for improvement, given the razor thin operating margins involved,” the report said.
It added that NOL will benefit from the return of 19 expensive chartered-in ships in 2015, while the proposed sale of its logistics division could help bolster its balance sheet and lead to one-off disposal gains of $200-250m.
In the first nine months of 2014, NOL lost $174m compared to a gain of $61m in the previous corresponding period. Its 2013 full year loss was $76m and in 2012 it lost $412m.
“Bunker makes up around 20-25% of operating costs for most liners, and hence the oil price decline is a welcome relief for liners,” DBS said.
Bunker fuel prices have dropped close to 60% over the last six months, following the collapse of the crude oil market.
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