CIMB maintains its Overweight stance on container shipping, as “order book relative to the existing fleet is light compared to the bulk and tanker sectors.”

Though the house expects an interim dip in freight rates in 2011 after a strong 2010, “rates should move up again in 2012 and beyond as supply growth is set to moderate and demand growth will pick up pace.”

The house’s top pick in the sector is Neptune Orient Lines (NO3.SG), rated Outperform with a $2.63 target. It says NOL will benefit from structural cost reduction when it replaces 150,000 twenty-foot equivalent units of expensive chartered-in ships with cheaper owned tonnage in 2012-2013. NOL shares are flat at $2.19.