Tuesday, August 14, 2012

Noble

Noble: 2Q12 results ahead of estimates; however this was largely boosted by one-off gains, which included net gains on Gloucester’s disposal and a one-off US$36m tax credit frm the sale of Gloucester. Stripping off fair value gains of US$50m net gain from Yancoal/Gloucester and US$35m tax credits would place net profile closer to in-line. Rev at US$24.2b, +23% yoy and +5.6% qoq, while net profit at US$194.8m, +39% yoy and +76.9% qoq. Operating Margins however shrank at 1.6% vs 2.2% yoy. Record rev was supported by record vol of 107m tons, attributed largely by grp’s Energy segment (34.4m tons) which saw increased tonnage in the energy coal and carbon complex division and oil, gas and power division. (Rev for energy division +42% and operating income +37%) Grp’s agriculture segment however saw decreased tonnage, -23% yoy and operating income -69% yoy to $51.1m. This was due to delay of sugar mills operations caused by the wet weather in Brazil, while Grains & Oil Seeds experienced a challenging qtr as China continued to see poor crush conditions. Going forward, grp sees significant growth opportunities in each one of these platforms and expect market stress to provide the opportunity to attract talent and invest in attractive assets to support its franchise. Nevertheless, 2Q12 results could possibly signal that the worst of Noble’s negative, should now be over post 2Q12 results–and this has marked stock-price bottoms historically. While there has been poor interest in the stock in 1H12, Noble showing good execution for another qtr couldlikely help generate greater interest in the stock given GFC like valuations on the stock currently. Ratings as follow: CIMB maintains O/p with $1.46 TP Citi maintains Buy with $1.68 TP UOB Kay Hian maintains Buy with $1.52 TP

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