Citigroup cuts Neptune Orient Lines (N03.SG) target to $1.60 from $1.80, based on 1.0x FY11 P/B vs 1.1x previously, to reflect rising headwinds in container shipping industry, risk of sharp fall in profitability on long-haul routes in 2011, says Dow Jones, keeping its Sell call.

Citi says while NOL's 3Q10 earnings may show strong sequential, on-year improvement due to impact of Transpacific freight rate increase, concerns over US consumer spending trends, increased deliveries of newly-built vessels suggest freight rates, profits in 2011 may disappoint.

“NOL is gearing up to expand capex, which could exacerbate investors' worries given uncertain profitability and cash flows,” says research house.

Shares last +1.6% at $1.93.