'No decision' on potential sale of NOL

Neptune Orient Lines (NOL) has hosed down media reports that majority owner Temasek Holdings has put it up for sale.

The company said yesterday it has not made any decision on a potential sale nor entered into any such agreements. Media reports suggested Temasek aims to sell it.

Shares of the mainboard-listed liner company jumped more than 8 per cent to a six-week high of 95.5 cents as trading opened yesterday.

It slipped to 92 cents at midday, but later recovered to close 7.43 per cent up at 94 cents.

A Wall Street Journal report last Friday, citing sources familiar with the matter, said Temasek has been seeking buyers for NOL in recent months.

Temasek owns about 67 per cent of the firm, which has been turning in net losses for the past four years, amid severe overcapacity in the global liner industry. NOL did not directly refute the claims in its filing to the Singapore Exchange on Sunday night. But it added it has "a duty to consider its actions to maximise shareholder value as part of its conduct of normal business".

"The company has not made any decision with respect to, and has not entered into any agreement for, a potential sale of the company and there is no assurance that any agreement for the sale of the company will be entered into," it said.

The firm also said it is "focused on returning its core liner business to sustainable growth and profitability", while advising investors to exercise caution when dealing in its shares and other securities.

NOL, with a market capitalisation of about $2.3 billion, is the largest shipping company listed here.

It had announced in February the sale of its profitable logistics business, APL Logistics, to Japanese freight carrier Kintetsu World Express Inc for US$1.2 billion - a move then that also stirred speculation in the market that the entire company would be sold off.

OCBC Bank investment analyst Eugene Chua said in a report yesterday that NOL is "indeed now more attractive to prospective buyers", given that it has become a pure-play container shipping company after divesting its logistics business.

"Recall that Temasek increased its stake in NOL from 30 to 68.6 per cent at $2.80 a share back in 2004," he said, noting that NOL has since distributed a total dividend per share of about $1.66.

"With NOL no longer a key strategic investment as it was 10 years ago, when Singapore was still building up the nation as a shipping and trading hub, it does make sense for Temasek to exit its investment in a struggling industry."

He maintained a "hold" rating on the stock, which has been languishing since the start of the year, despite surging to $1.185 in April.

Jacqueline Woo

A version of this article appeared in the print edition of The Straits Times on July 21, 2015, with the headline ''No decision' on potential sale of NOL'. Print Edition | Subscribe