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Neptune Orient Gains on Plans to Explore Logistics Sale

Neptune Orient Lines Ltd., the biggest container shipping company in Southeast Asia, jumped the most in more than 11 months in Singapore trading after saying it may sell its logistics business.

Neptune Orient gained as much as 5.6 percent, the most intraday since Sept. 5. They traded at S$1.02, or up 4.1 percent, as of 1:08 p.m. in Singapore. The stock has fallen 9.3 percent this year, compared with a 5.1 percent climb in the Straits Times Index.

Neptune Orient, which is expected to post a fourth straight annual loss this year and reported total liabilities of about $7 billion earlier this month, said it’s considering options, including a sale or initial public offering of its logistics business. Loss widened to $53.7 million in the quarter ended June 27, the company said Aug. 7.

“A sale could unlock value within the group,” Derrick Heng, an analyst at Maybank Kim Eng Research Pte in Singapore, said in a note today. “It could use the proceeds to pay down its high debt, reinvest in new vessels for longer-term growth and M&As.”

APL Logistics, which accounted for 18 percent of its total sales in the second quarter, posted $14 million in core earnings before net finance, tax and exceptional items, Neptune said Aug. 7. Sale of the logistics business is still being examined, according to the statement today.

“These considerations are preliminary and exploratory in nature,” Neptune said. “There is no assurance that any definitive transaction for the sale or an IPO of NOL’s logistics business will be concluded.”

Loss will probably be about $124 million this year, according to the average of 20 analysts’ estimates compiled by Bloomberg.

The company is looking to sell its logistics unit to raise more than $750 million, Reuters reported earlier, citing people familiar with the situation.

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