BUY rating and target price of $2.38, based on 15x FY10F/FY11F PER. We note that Noble has invested more than US$2b since 2006 in greenfield upstream and midstream projects. As these take 3-5 years on average for earnings to flow through, we believe the time is ripe for Noble to expect robust earnings growth, especially in the Energy and Agriculture segments.
Noble’s strategy is to secure and deliver commodities from low-cost producers to high-demand markets such as China and India. The long-term economic growth of the emerging markets would spur demand for commodities and, in turn, benefit Noble. The strategic tie-up with China Investment Corp (CIC) should facilitate deeper penetration into China, thereby adding a new dimension to its growth.
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