Noble Group: Credit Suisse upgrades to O/p from neutral with $1.80 TP. House note that Noble, whose P/B has fallen to 1.28x, just 3% above the 2008-09 lows of 1.24x, is the latest addition to the trough valuation story.
The key driver was the weak Sep-quarter performance, on carbon credits write-downs, counterparty defaults in cotton, and weak, drought-induced sugar crop. Overall, house do not see a likely recurrence of 3Q, given carbon credits in the product portfolio are now minimal, new contract structures for cotton are in place, and that anticipate stronger vol and utilisation for its sugar mills.
Note that tonnage growth during the period was strong, up 34% YoY and 25% QoQ. And looking ahead, see further ramp-up in vol, driven by increased coal demand, expanding agriculture capacities, and traction in its oil and gas initiatives. Valuations will also be supported by potential spin-off of its agri-operations.
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