Noble Grp

Noble Grp: UOB Kay Hian upgrades to Hold with S$0.92 TP. House note that the worst for earnings could be over but the turning point remains unclear with margin under pressure from weak demand and large soybean, sugar cane and cotton supplies. New capacities could provide buffer and new investment opportunities could lead to more offtake from miners. Note that business is still challenging for agricultural division with lower prices and challenges to move the volume out from producing countries. Hopefully, these could be somehow mitigated by the new sugar mills in Brazil and about three new soybean crushing plants in Brazil, Ukraine and South Africa coming on-stream. Noble is now trading below its book value of US$0.81/share (or $1.02/share) as at 31 Mar 13 and is at its historical low. But further upgrades will have to depend on the sustainability of its earnings improvement.