Heavy buying was seen for Samudera today as transport stocks are expected to benefit from OPEC's meeting (currently ongoing) which is expected to result in higher output and lower oil prices. Samudera is seen as a beneficiary as fuel cost accounts for about 10% of its operating cost.

Samudera's trading volume today (1.9m shares) is more than double the average for last week (0.7m). This is clearly indicative of strong buying interest. The regional container shipping company is seen as a proxy for NOL whose share price has surged nearly 60% in the last one week. More upside is seen as NOL has just released its FY99 results showing a sharp turnaround from a $423m loss to a $159m profit. The FY99 performance is about 50% more than consensus forecast ($105m net profit).

A teleconversation with Samudera's management a few minutes ago revealed that Samudera's business like NOL's is also booming. Its growth of container traffic in the first two months of this year has picked up sharply to 21% compared with 16% for full year 1999.

Samudera also said that it will finalise plans to expand into the huge Mediterranean market by the end of this week and operations in the region will commence by June. Samudera indicated in October last year that its undertaking a feasibility study to expand into the Mediterranean market. The market potential of the Mediterranean region is estimated at 19m teus versus 15m teus for Southeast Asia. Currently there are two major feeder operators in the Mediterranean. Samudera will tie hands with existing players and will offer value via its strong brand name and customer base.

Recommendation: BUY: S$0.485
By Vasu Menon