Neptune Orient Lines doubles 3Q10 net profit to $282 million in 3Q10

Higher container shipping volumes and rates pushed Neptune Orient Lines (NOL) 3Q10 net profit to increase by 102% to $282 million from $139 million, according to Phillip Securities Research Pte Ltd.

In a statement, the research company said NOL reported a year-on-year revenue increase of 55.3% to $2.429 billion in 3Q10 compared to the same period last year.

The revenue was 4.3% higher than our estimate of $2.329 billion while the net profit was 80.8% better than the forecast of $156m.

Revenue and net profit increased because of higher container shipping volumes and rates. It also mentioned that it expected to remain profitable for the full year in FY2010.

“As NOL posted higher-than-expected 3Q10 net profit, we increase our net profit estimates by 52.0% to $384m in FY2010E. Moreover, we raise our earnings estimates by 57.1% and 46.5% to $457m and $593m in FY2011E and FY2012E respectively due to better shipping volumes and rates, Phillips Securities said.

It added that they also note that NOL has placed an order for 12 new container ships that will be delivered in 2013 and 2014, which shows that NOL is confident on the outlook for the shipping industry.

Phillips Securities also upgraded from hold to buy and raise fair value from S$2.06 to S$2.36

In 4Q10, shipping volumes and rates are expected to decline slightly as the 3Q10 peak season is over.

“However, we believe that global trade is likely to remain firm next year and NOL will benefit from higher volumes and rates. Therefore, we raise our recommendation from hold to buy. Fair value has also been increased from S$2.06 to S$2.36. This is a change from 1.24 times FY2010E book value to 1.30 times FY2011E book value,” Phillips Securities said.