NOL reported a smaller loss of US$146m in 2Q09 from US$244m in 1Q09. It mentioned that the performance for 3Q09 would be better than 2Q09 due to seasonal demand. Manufacturers would start shipping and manufacturing goods in 3Q09 in preparation for the Christmas season. We forecast the loss to narrow further to US$123m in 3Q09. Despite the improvement, NOL is expected to report a full year loss of US$633m in FY2009F. As the global economy continues to recover, it is likely to report a lower loss of US$131m in FY2010F and return to profit of US$208m in FY2011F.
From the list, we note that the median P/E and P/B for the industry are 8.63 and 0.91 respectively. NOL is currently valued at 19.20 times P/E and 0.65 time P/B. Our recommendation. NOL is expected to be a beneficiary of the recovery of the global economy. Although it is currently reporting a loss, it is financially strong as it has the resources to emerge stronger from the crisis. In fact, its net debt to equity ratio is 0.0 for FY2009F. We have a buy recommendation and fair value is S$2.12, which is 1.2 times book value for FY2009F.
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