Noble

Noble: Goldman Sachs Maintains Buy with $1.55 TP. House see the 3Q11 quarterly loss as being non-recurrent in nature – when margins normalize, earnings can rebound (as was the case for Wilmar in 2011E, after Oilseeds losses in 2H2010). Meanwhile, Noble’s structural vol growth trend is intact (9M2011 +20% yoy), and its balance sheet remains healthy (3Q11: 0.42X adjusted net debt/equity, only 15% of debt due within 1 year, US$4b of unutilized committed credit lines). Despite prior CEO departure, do not expect major operational disruptions. Acting CEO Richard Elman is the founder/major shareholder of Noble and was CEO before Ricardo Leiman.

Overall, house expect earnings to recover in 2012E, with ROE rebounding to 14% (from 2% in 3Q11).
(2) Credit rating affirmation – S&P and Moody’s have put Noble on negative watch, but Noble’s (BBB rated) bond yields have already opened up a 300 bps spread with another similarly rated commodity trader (Bunge). If Noble’s investment grade credit rating is reaffirmed, it may be received positively by investors