Tuesday, May 14, 2013

Tough Business Conditions - NOL, Vard Holdings

[Previous post: Twice Lucky in a Month? - Asian Pay Television Trust IPO]

NOL (Shipping & Logistics Chain)
NOL reported a US$76 million profit on the back of the sale of its NOL headquarters building. Without the gains from the sale, it would still be in the red with EBIT at -US$85 million. The company has been having a very tough 2-3 years due to supply glut of liner vessels putting pressure on shipping rates but it seems that with a new CEO and leadership team, the cost cutting measures have become more aligned and aggressive to unlock value for shareholders in these tough times. For both liner and logistics, core EBIT losses have been narrowed and it is now in a stronger cash position after tapping new loans and increasing investment in PPE with cash from its sale of the building. Having said these, its performance is still highly correlated with shipping rates where there still seems no end to the oversupply of vessels. Europe and US are still in the doldrums and economic trade has not improved much compared to 2012.

  • Black candlesticks for the last 5 weeks of trading. Share price has been plunging since the start of 2013 until a strong resistance at $1.10.
  • MACD - seems to be turning upwards weakly.
  • RSI (25w) - still downtrended
  • Chance of technical break on narrowing losses - $1.18 (8% from current levels) Chances are traders will take this chance to buy at a low/major resistance and attempt a short term trade on NOL. Given that prices have been sliding since the start of the year, this announcement today may give some relief to the selling pressure. 


VARD (Shipbuilder,Offshore Services Company)
Previously known as STXOSV, Vard has had its share prices fall since Oct 2012 after poor quarterly results in Nov and a price offer for shares by Fincantieri at $1.22/share. Vard had secured new contracts for 3 OSCVs worth some 3 NOK million in the first quarter, one of the slowest start since 2009. Delivering only 5 out of its 24 vessels scheduled for delivery this year, EBITDA has fallen some 23% in 1Q2013. Cash position has also dipped to 2 NOK billion from 3 NOK billion in March 2012.
  • Share price slide since Oct 2012 with little indication that there will be a reversal in trend. 
  • MACD - is negative but with some chance of turning upwards.
  • RSI (25w) - trending downwards towards 30%. 
  • Bad news and bad technical chart - $0.90 (-15% from current levels). It does seem that investor interest in this stock has been waning since 2011 when its prices were on a one way trajectory. Oct 2012 has marked the start of its share decline and so far there is still no good news to send its prices up. Bad news, bad technicals. Go short.


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