Noble Grp

Noble Grp: CIMB upgrades counter to Trading Buy. House note that after a few qtrs of lackluster earnings, 1Q12 could finally cement Noble’s recovery. The operating environment was generally more forgiving, characterised by an improvement in China’s soybean crush margins and a general bottoming out of commodity prices. Liquidity also returned as European banks resumed trade financing activities. Add that Noble has been taking advantage of arbitrage opportunities to lock in favourable margins, and these should provide support to 1Q12 earnings. The industry’s performance and tone adopted by its competitors are more optimistic today compared to three months ago. Cargill reported a 7-fold sequential jump in profits, lifted by strong earnings from food ingredients and energy trading; ADM’s profits grew 53% qoq, driven by broad-based growth as macroeconomic headwinds subsided. Overall, see bargain hunting opportunities at current levels. At 8x CY13 P/E, the stock is the cheapest among its peers.