Noble Group

Noble Group took a 5.13% stake in USEC, a US-listed uranium enrichment company for US$30.2m. USEC has the only uranium enrichment facility in the US and is a leading supplier of low-enriched uranium fuel for nuclear power plants with over 50% of US market and more than 28% of the global enrichment market. The enrichment industry accounts for 31% or US$7.8bn of the US$25bn worldwide nuclear fuel business.

Globally, there are currently 438 nuclear reactors in operation with 56 under construction and another 490 planned or proposed. While there may be minimal earnings impact from this investment (+1-2% to Noble’s FY11/12 earnings), Noble’s product range across the energy segment will now span beyond coal, oil and gas to include nuclear footprint and prospects for growth are good with IAEA is projecting a 27% rise in nuclear capacity by 2030. We like the stock for its pro-active mgmt and undemanding valuation of 11.8x FY10 P/E. TP pegged at $2.38.