Broker's take: Temasek likely to take discount on NOL for greater economic gain

TEMASEK Holdings, the controlling shareholder of Neptune Orient Lines (NOL), is likely to have agreed to sell to France's CMA CGM at a slight discount in hopes that the deal would bring greater economic benefit to Singapore, a broker report said on Tuesday.

The shipping firm announced a S$3.4 billion takeover offer from CMA CGM that implied a valuation of 0.96 times price-to-book. NOL was trading at about 0.7 times of its book value before July 16, the day news broke that Temasek planned to sell its stake to the French suitor.

OCBC Investment Research analyst Eugene Chua said investors should accept the offer, calling it a fair offer price given the muted outlook.

"We believe one of the key reasons why Temasek is willing to accept the offer at a slight discount of 0.96 times book value is because of CMA CGM's commitment to grow its presence in Singapore," he noted.

"While Temasek may sell at a discount, the resulting economic benefit that Singapore may enjoy could be higher given CMA CGM's intention to contribute to reinforce Singapore as a centre of excellence in the field of maritime activities as CMA CGM plans to use Singapore as a key hub in Asia and to establish its regional head office here."

At 10am, shares of NOL were down half a cent to S$1.22. It was the second most actively traded stock, after Blumont. Some 36 million shares changed hands.