Noble

Noble: Following last week’s speculation about that China COFCO is mounting a possible JV with Noble, share price has spiked significantly. If the talks come into fruition, the deal could prove strategically positive for both Noble and COFTO, in particular for the latter as it can further expand its overseas reach following its recent stake purchase in Dutch grain trader Nidera. Meanwhile, Maybank KE is not very excited on the JV until greater clarity on structure comes about, and points out any asset sale at this juncture is not beneficial for Noble given its current low valuation. That said, despite its cheap 1x FY14e P/B valuation, Maybank KE highlights Noble’s business outlook for the year is far from rosy, as coal and iron ore trading (largest revenue contributor), could be affected by China’s policy change. Other base metals and the agriculture division will then need to drive growth. Current extreme weather in Brazil could also hinder recovery process of Noble’s agriculture business. Maybank KE maintains Hold with TP of $1.04.