NOL Enters New Alliance On Asia-Europe Trade
Neptune Orient Lines (NOL) has entered a new alliance on the unprofitable Asia-Europe trade with five other shipping lines – Hapag-Lloyd, Hyundai Merchant, Mitsui OSK Lines, Nippon Yusen KK and Orient Overseas Container Line – in an effort to stem the decline in rates. This cooperation is also a bid by NOL to better compete with industry leaders; earlier, Mediterranean Shipping and CMA CGM, the second and third-largest shipping lines, formed a partnership while Moeller-Maersk A/S, the biggest, merged some of its trades on the route. Under the accord, the alliance will operate more than ninety vessels offering nine services with operations starting by April 2012. Samsung Securities noted that the combined presence of the alliance on the route is equivalent to that of industry leader Maersk, and such enhanced capacity management is likely to bring about rate increases that will drive the liners’ shares higher.
Significance: Reactions within the analyst community are mixed. Some are cautioning against excessive optimism as the alliance ‘won’t necessarily reverse the trend of freight rates or bring them back to profitability’, in addition, the deal has yet to pass the European regulatory scrutiny.
Dukang Distillers Adds Sake To Product Range
Dukang Distillers Holdings (Dukang Distillers), which has been traditionally focus on baijiu production, is adding sake to its product range. The group has appointed Taiwan Tobacco & Liquor Corp to produce sake at the latter’s breweries in Taiwan, marking its first major corporate activity on the island since the listing of its Taiwan depository receipts on the Taiwan Stock Exchange. On the new sake product, it would be sold under the Dukang brand in China – its strategy involves building up brand presence and subsequently leveraging the existing baijiu distribution network to penetrate key target regions. Nightclubs, Japanese and Korean restaurants as well as specialised distribution channels for sake are identified as the primary target markets.
Significance: The baijiu market in China remains highly competitive, leading Dukang Distillers to broaden its product range into lower-alcohol content beverages such as sake which it sees substantial growth potential. Specifically, the country’s sustained economic growth, rising disposable income and increasing preference for foreign cuisine bodes well for the move.
IEV’s Malaysian Associate Wins RM262m Contract
IEV Holdings’ (IEV) 30%-owned associate IEV (Malaysia) has won a RM262 million contract, to undertake major supply and installation work for an established and major oil and gas operator in South-east Asia. Under the contract, the work includes engineering, fabrication, delivery, hook-up, and commissioning of a wellhead platform; procurement and installation of a new pipeline; and host tie-in to existing offshore production facilities. The project will be executed through a tie-up with a US engineering company that specialises in platform re-use in the Gulf of Mexico. Work is expected to commence this month and is slated for completion by the end of 2012.
Significance: Following the announcement, UOB Kay-Hian reiterated its ‘buy’ call and raised target price to $0.59 from $0.51. The research house noted that IEV has moved from an offshore subcontractor to a turnkey contractor, evident by plans to move up the value chain by bidding for higher-value turnkey projects.