Noble

Noble: 1Q14 results beat. Net profit soared 269% y/y to US$152.3m while revenue decreased 7% to US$18b. Supply chains saw its second highest operating income at US$465m (+47%), while gross operating margin recovered to over 2% for the first time in 8 quarters. Energy division contributed US$437m (+19%) of operating income as operating margins improved from 2.54% to 2.91%, due to an exceptionally cold winter in US, as a result of the polar vortex. This drove natural gas volatility hence improvement in operating margins. Metals, Minerals and Ores contributed US$70m (+367%) of operating income with operating margins of 2.42% (1Q13: 0.31%), underpinned by the increase in the physical premiums for aluminum. Agriculture’s operating loss narrowed to US$42m (1Q13 operating loss: US$67m), as weak soya bean crushing margins in China offset solid performance in South America. StanChart expects market reaction to 1Q14 results to be positive given above results. StanChart also guides that on a proforma basis, assuming the 51% sale of agri-division to COFCO consortium took place at the start of the year, 1Q14 earnings would have been US$192m, and net gearing would have fallen to 22%. Noble trades at ~11.1x annualized 1Q14 P/E and ~1.2x P/B. Latest broker ratings: StanChart: Maintains Outperform with TP$1.28 CLSA: Upgrades Noble to Buy from O/PF, with TP increased to $1.48 from $1.34 Maybank KE upgrades to Buy from Hold, with TP increased to $1.37 from $1.13