SINGAPORE -- A newspaper report that Neptune Orient Lines (NOL), a Singaporean shipping line 65% owned by sovereign wealth fund Temasek Holdings, is up for sale spurred share buying on Monday after the long holiday weekend.
The Wall Street Journal reported on Thursday that NOL has been "shopped to prospective buyers in recent months".
In early morning trade, the share price peaked at 0.965 Singapore dollars ($0.7), 10% higher than Thursday's close, and the counter closed at S$0.94.
"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," NOL said in a filing to Singapore Exchange late on Sunday night. Despite the comment, the market responded to the report positively with expectation for the potential deal.
After the news story appeared, Singapore Exchange was closed on Friday to mark the feast of Eid al-Fitr at the end of Ramadan, Islam's month of fasting and prayer.
NOL has struggled in recent years with the global slump in shipping due to excess capacity and weak demand. The container line has logged three years of consecutive losses since 2011. These have been trimmed in recent quarters with cost cutting and capacity control. In the first quarter, the company's revenue decreased 13% year on year to $1.98 billion, but net loss decreased to $11 million from $98 million.
In February, NOL sold off APL Logistics to Japan's Kintetsu World Express for $1.2 billion. Since that sale, there has been market chatter that the main shipping business would be put up for sale as well.
Divesting NOL might be an indication that shipping, hitherto considered a key industry for a trading nation like Singapore, has diminished relative importance in the national economy. As one equity analyst said privately, "With other industries such as finance being established, there is no longer a political need for Temasek to hold a stake in NOL."
As Temasek's investment diversified globally, including in China, its portfolio in Singapore decreased to 28% in March this year, down from 52% in 2004. Even after a series of privatizations, Temasek still owns a significant share of some Singapore companies in "strategic" industries, such as DBS Group Holdings (banking), Singapore Telecommunications and Singapore Airlines. The sovereign wealth fund is also still sole owner of PSA International, the container port operator, and MediaCorp, the TV broadcaster.
NOL was established as the national shipping line in 1968, three years after Singapore became a sovereign state. In the days when manufacturing and service industries were nascent, shipping was core to the developing economy. After privatization in 1981, NOL continued to expand, and acquired APL, an American container shipping line in 1997. In 2003, however, NOL sold its tanker business to Malaysia's MISC.
After the report about divesting NOL, Temasek Holdings offered only its usual refrain: "We do not comment on market speculation and rumors."