Noble Grp

Noble Grp: Reported 1Q11 results, which were in-line, with rev at US$20b, +17% YoY and +14.9% QoQ. Net Profit at US$203.2m, +77% YoY and -17.8% QoQ. On an adjusted basis (Excluding US$52.2m gain on sale of fleet segment), core net profit was US$150m slightly below estimates. Gross Margins eroded to 2.28% vs 2.91% YoY & 3.11% QoQ, due to a plunge in MMO’s division margins, which fell to 1.36% vs 8.26% YoY on back of a major correction in the iron ore mkt in Feb and its impact from Jap’s quake.

Increased YoY rev performance was supported by an increase in vol tonnage, at 50.1m Mt, +17% YoY, but -4.9% QoQ and higher commodity prices, with grp’s energy segment now accounting for 72% of Grp’s rev vs 65% for FY10. 1Q11 results were also impacted by a delay in the Brazil sugar cane harvest, which could accelerate in
subsequent qtrs from Noble’s new Meridiano mill (2Q) and newly acquired Cerradinho sugar mill (3Q)...

Going forward, grp remains confident of its outlook, tipping a sustained global recovery to continue boosting demand and sales of commodities/energy. We note that balance sheet remains strong, with Net Gearing improving to 47.8x vs 53.2% YoY, and current ratio edging higher. At current price, grp trades at an annualized 14x FY11E P/E….

Goldman Sachs maintain Buy with $2.60 TP and DMG Maintains Buy with $2.50 TP. RBS reiterate Buy with $3.00 TP, and UBS maintain Buy with $2.70 TP.