OCBC is advising shareholders of Neptune Orient Lines to accept CMA CGM’s offer, it says in a Friday report.
That’s because NOL’s share price of $1.265 represents a “mere 2.8% upside” to the offer price of $1.30/share compared to a “significant 20.9% downside” to OCBC’s unchanged fair value of $1.00 if the takeover bid falls through on failure to meet pre-conditions.
Based on SGX filings by NOL, CMA CGM has been slowly accumulating shares of Neptune Orient Lines (NOL) since early Dec 15, and has spent more than $160 million to acquire more than 130 million NOL shares through open market purchases.
As at market close on March 23, CMA CGM owns a 5.21% stake in NOL.
In a Friday note, OCBS estimates that about 45% of NOL’s 4Q15 revenue comes from Transpacific (TP) trade routes, of which contract rates account for 70% of the volume on TP.
“We believe the plunge in freight rates last year due to overcapacity is likely to dominate the in-progress 2016/17 TP service contract negotiations between the beneficial cargo owners (BCOs) and carriers,” says lead analyst Eugene Chua.
Chua says there are indications that BCOs are signing 2016/17 contracts with rates to US West Coast (USWC) ranging from $1,100-$1,400/FEU compared to $1,600-$1,800/FEU in 2015/16 contracts.
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That’s because NOL’s share price of $1.265 represents a “mere 2.8% upside” to the offer price of $1.30/share compared to a “significant 20.9% downside” to OCBC’s unchanged fair value of $1.00 if the takeover bid falls through on failure to meet pre-conditions.
Based on SGX filings by NOL, CMA CGM has been slowly accumulating shares of Neptune Orient Lines (NOL) since early Dec 15, and has spent more than $160 million to acquire more than 130 million NOL shares through open market purchases.
As at market close on March 23, CMA CGM owns a 5.21% stake in NOL.
In a Friday note, OCBS estimates that about 45% of NOL’s 4Q15 revenue comes from Transpacific (TP) trade routes, of which contract rates account for 70% of the volume on TP.
“We believe the plunge in freight rates last year due to overcapacity is likely to dominate the in-progress 2016/17 TP service contract negotiations between the beneficial cargo owners (BCOs) and carriers,” says lead analyst Eugene Chua.
Chua says there are indications that BCOs are signing 2016/17 contracts with rates to US West Coast (USWC) ranging from $1,100-$1,400/FEU compared to $1,600-$1,800/FEU in 2015/16 contracts.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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