Noble Group

Noble Group: CLSA notes that Noble is falling back to its original asset-light strategy, after its lack-lustre results with their asset-medium strategy. Noble's divestment in Gloucester coal and taking small stakes in order to secure off-take agreements instead of massive acquisitions, sees them shifting its strategy from being asset-medium, towards asset-light; which could see the reversal of 5 years of capex taking some time to deliver. Volumes for FY12 only grew 1.8% y/y due to weakness in both Agriculture and Metals segment. Agriculture results (declined 62% YoY) was due to a toxic combination of logistic issues in Argentina and low sugar and cotton prices. Its sugar segment might struggle to make a reasonable return for the near term after their US$1.5b Brazilian sugar investment, with sugar prices hovering around US$0.18/lb; Noble generates ROEs of 9-11%, below its cost of Equity (13.8%). CLSA do not think it should trade significantly above book value. CLSA has an UNDERPERFORM, TP of $1.20;