Noble

Noble: 4Q13 results were broadly in line. Revenue was flat at US$24.4b, while net profit jumped 28% y/y to US$116.5m, posting its best bottom line performance since 2Q12. On a full year basis however, core net profit shrank 32% to US$309m, even after adjusting for the US$79m accounting loss from Yancoal Australia in 3Q. Mgt slashed full year dividend by 50% to US 0.91¢ from US 1.81¢ in FY12. Operationally, the agri segment remained weak, while energy performed well during the quarter. Agri gross profit remained weak in absolute terms, despite improving slightly from US$14m in 3Q13 to US$24m in 4Q13. Agri volumes declined 24% y/y to 13m tons. Noble’s sugar mills experienced a modest shortfall in crush throughput due to heavy rains, further impacted by the continued decline in sugar prices. Meanwhile, the better crush margins in China were offset by more challenging conditions in Argentina. Energy gross profit expanded 5% y/y to US$299m, driven by 18% y/y volume growth with an expanding origination and marketing network. Going forward, Maybank-KE notes the extreme drought that Brazil is facing has become a cause of grave concern, as the country provides Noble a key source of grains, coffee and other agri-commodities, and could indirect affect Noble’s soybean crushing business in Argentina. The house sees a higher risk of earnings miss in the next few quarters and a delay in earnings recovery to FY15e. Latest broker ratings: Maybank-KE maintains Hold, trims TP to $1.04 (from $1.07) CIMB maintains Hold, lowers TP to $1 (from $1.04) HSBC upgrades to Neutral (from Underweight), raises TP to $1.08 (from $0.94) Noble maintains Underperform, with TP $0.90