Noble: HSBC says cotton has returned to normalized volatility in 4Q11, which reduces the risk of farmer defaults which occurred in 3Q. Likes that mgt has inidacted a Group-wide restructuring to enhance communications, decision support, efficiencies and pdt/ country centric profitability.
The house also expects a new CEO to be announced before 4Q11 results on Feb 28 – one which focuses more on strategy and vision for the Group while internal senior mgrs will be elevated to take on overall operational work. Says this opens the door for a qualified non-industry candidate to be appointed, while giving more clarity on the direction of the Group.
Believes the current P/E of 10.7x FY12E adequately reflects the current risks. The house upgrades Noble to Neutral from Underweight, raises TP to $1.51 from $1.41.