Neptune Orient Lines (NOL)

[dydx]

NOL's business is like, of every 10 years, there would be 1 or the most 2 years' of sunshine, and the other 8 or 9 years would be inclement weather likely of the extreme - hurricane, sandstorm, thunderstorm, blizzard, etc. While it could be a cyclical investment opportunity; but as a longer term investment, it has absolutely destroyed shareholders' value.

[karlmarx]

Of course there is more than one way to look at the "value" of a company. The current book's value. The estimated future book's value. The value of the management team. The value of the owner. But the most significant value(IMO) of a company to me is can it survive in the worst of times? If can, then can it be profitable again? i have said NOL is for people who love "crisis investment" not really for value investors. It's too volatile too value properly. i don't believe you can value NOL properly.

Quote:-

John Wooden:- "It's what you learn after you know it all that counts"

Kahneman's admonition:- "The most natural way to think about a decision is not always the best way to make the decision"

volatility in the stock market price, or even the freight market in this case, does not necessarily make it difficult to value. likewise, a less volatile industry does not mean it is easier to value.

P/E is not as useful a tool to value cyclical industries since earnings are erratic. P/B will be more appropriate since cyclical industries, such as in this case shipping, are often capital intensive; which therefore means the value of the company will lie mostly on its fixed assets (in this case, vessels).

i'm not sure how one values the management team or owner, but where the company has a (real or perceived) competitive advantage over its peers that is intangible (brands, management, strategy, efficiency, etc), this is often reflected in a premium to book value (P/B > 1.0).

[Temperament]

Of course there is more than one way to look at the "value" of a company. The current book's value. The estimated future book's value. The value of the management team. The value of the owner. But the most significant value(IMO) of a company to me is can it survive in the worst of times? If can, then can it be profitable again? i have said NOL is for people who love "crisis investment" not really for value investors. It's too volatile too value properly. i don't believe you can value NOL properly.

Quote:-

John Wooden:- "It's what you learn after you know it all that counts"

Kahneman's admonition:- "The most natural way to think about a decision is not always the best way to make the decision"

volatility in the stock market price, or even the freight market in this case, does not necessarily make it difficult to value. likewise, a less volatile industry does not mean it is easier to value.

P/E is not as useful a tool to value cyclical industries since earnings are erratic. P/B will be more appropriate since cyclical industries, such as in this case shipping, are often capital intensive; which therefore means the value of the company will lie mostly on its fixed assets (in this case, vessels).

i'm not sure how one values the management team or owner, but where the company has a (real or perceived) competitive advantage over its peers that is intangible (brands, management, strategy, efficiency, etc), this is often reflected in a premium to book value (P/B > 1.0).

Well, maybe we can value a management team based on their past historical records if any especially in difficult business climate. ( eg. i think no one can fault WB's record. Of course this not based on tangible values investing). As for owner(main share-holders), is just mainly how good or strong is their financial reputation. It is best in the worst situation (if they have to) the main share-holder will even use their own fund to see that the company does not go the way of the dodo due to owner's special considerations (This maybe based on cognitive bias-Wishful Thinking. Ha! Ha!) But sometimes the intangibles can come true and maybe more important then the "tangibles". Opps ,of course this not value investing again.) The main thing is there are values in tangibles but also do not neglect to look at the intangibles, which may have values too.

[greengiraffe]

I cant agree with you more on this. Luckily noone fall prey to their recently failed perpertual issue. Seriously can't fancy why would anyone buy a perpetual securities of a highly cyclical company.

NOL's business is like, of every 10 years, there would be 1 or the most 2 years' of sunshine, and the other 8 or 9 years would be inclement weather likely of the extreme - hurricane, sandstorm, thunderstorm, blizzard, etc. While it could be a cyclical investment opportunity; but as a longer term investment, it has absolutely destroyed shareholders' value.

[money]

haha NOL is selling its freehold property, obviously i TOTALLY AGREE that it is selling to release capital for strategic investment, and not because it its bleeding cash too badly.

Honestly, i have nothing against NOL, just feel that it is a speculation, not of investment grade. Temasek can keep it all it wants, pump in more money through a rights issue, it provides jobs for singaporeans anyway. However, with capex so high, this cyclical business just seem to risky for me.

http://info.sgx.com/webcoranncatth.nsf/V...F00308CBC/$file/NOL_Building_2Jul2012.pdf?openelement

[pianist]

i wonder if there is a co-relation between cpf minimum withdrawal age & nol performance?

[Musicwhiz]

The Straits Times
Jul 3, 2012
NOL to sell headquarters in Alexandra Road
Move aimed at releasing capital for strategic investment, says firm

By Melissa Tan

NEPTUNE Orient Lines (NOL) is putting the Alexandra Road building that houses its headquarters up for sale to free up capital.

Although the container shipping giant has found itself in dire straits recently, amid a global industry downturn, analysts say the move does not appear to be an act of financial desperation.

NOL said yesterday in a statement that it intends to sell its 29-year-old HQ 'to release capital for strategic investment'.

NOL added it 'has not decided on a reserve price' for the freehold commercial building.

It will decide whether to relocate the 500 or so employees who work there, or remain in the existing building as a tenant, only after a buyer is identified, it added.

The 26-storey tower is at 456 Alexandra Road, and will be marketed by Jones Lang LaSalle.

The NOL Group occupies 90 per cent of the building, and is expected to lease back the premises, Jones Lang LaSalle said in a statement.

The building is on a 108,060 sq ft site zoned for commercial use. It has a gross floor area of 294,500 sq ft and an existing net lettable area of 207,505 sq ft.

R'ST Research director Ong Kah Seng said: 'If a sale and leaseback option is considered, the building sale price could be about mid-$1,000 per sq ft (psf), or in excess of it, and likely to be up to about $1,700 psf.'

This estimate is based 'on possibilities of long leases of gross rents of about $6 psf per month from the nearer term - depending on prevailing market conditions and enhancement costs on the building's addition and alteration works', Mr Ong said.

Based on the net lettable area, this values the tower at up to about $353 million, with a rental of around $1.25 million a month.

This is the second time that NOL is selling the building.

It was sold for $185 million in 1998, in Singapore's first asset-backed securitisation deal, to special-purpose vehicle Chenab Investments.

But NOL bought it back, a spokesman said.

NOL has been in the red for five straight quarters, hit hard by the double whammy of high fuel costs and low freight rates.

It said in May that it was on track to save US$500 million (S$637 million) in total this year, and was undertaking an organisational restructuring that would result in additional annual savings of about US$70 million from next year.

But analysts cautioned against interpreting NOL's intended sale as a last-resort measure or sign of desperation.

'Although it might have negative connotations from a public relations perspective, quite a few brand-name companies like PSA Corp also do not own their HQ buildings (PSA's is now owned by MapleTree Commercial Trust). And PSA is a company that has been doing well,' Maybank Kim Eng analyst Bernard Chin said. 'So this could just be one of the few options NOL is exploring to raise capital.'

Another analyst, who declined to be named, said NOL was 'actually very well funded... they are not in urgent need of cash'.

'They're just releasing capital that is otherwise trapped... I think they wouldn't mind leasing the building back and using the money to build their business elsewhere, like logistics.'

Mr Ashish Manchharam, head of investments for South-east Asia at Jones Lang LaSalle, said that the sale of the building was an 'opportunity for buyers to refurbish or redevelop the property, because it's quite an old building now'.

He added in a statement: 'Large commercial freehold opportunities of this nature rarely come to the market, and we expect strong interest in the NOL Building through this sale campaign.'

It is up for sale through an expressions of interest campaign closing by the middle of next month, Jones Lang LaSalle said.

Other companies that had sold their HQs and leased them back include Osim, which sold its Ubi HQ to Ascendas Real Estate Investment Trust nearly a decade ago.

melissat@sph.com.sg

[money]

i wonder if there is a co-relation between cpf minimum withdrawal age & nol performance?

haha negative correlation. if nol has negative performance, then cpf withdrawal age will increase

[yeokiwi]

i wonder if there is a co-relation between cpf minimum withdrawal age & nol performance?

haha negative correlation. if nol has negative performance, then cpf withdrawal age will increase

NOL, PSA, DBS, SIA, ST Engg, Singtel and possibly Olam are strategic holdings of Singapore. Even though they may be bleeding year in year out, they will not be divested away.
So, yes, since we cannot get rid of them, they will affect the withdrawal age a bit..haha..

[Temperament]

i wonder if there is a co-relation between cpf minimum withdrawal age & nol performance?

haha negative correlation. if nol has negative performance, then cpf withdrawal age will increase

NOL, PSA, DBS, SIA, ST Engg, Singtel and possibly Olam are strategic holdings of Singapore. Even though they may be bleeding year in year out, they will not be divested away.
So, yes, since we cannot get rid of them, they will affect the withdrawal age a bit..haha..

SIA will evolve to be less & less strategic into the future, i think. As it is now it becoming less and less a "premium" airline. To stay afloat, it has lowered it's airfare due to prolific no-frill airlines competition, if i am not mistaken. Somehow i never invested in SIA. But i invested in NOL though it is also seemed to be a losing investment. Ha! Ha! Let's see how long it takes for NOL to turn around this time or finally NOL joins the Davy Jones' Lockers. i don't think so Papys will allow it to happens.
My 2 cents.