Noble

Noble: Noble’s operating profit growth – with a 25% CAGR between 2006 and 2013 from the energy and metal trading business – has been offset by its foray into asset heavy agriculture processing and a consequent decline in ROE and earnings since 2011. Barclays expects that to change with its ROE moving back to a double-digit rate from 2015. Three catalysts for this includes: 1) completion of 51% stake sale in the loss-making agri business by end-2014 and resultant de-gearing; 2) Noble’s seed investment in X2 Resources and long-term optionality attached to this; and 3) earnings-accretive M&A over the past 6-12 months. With its P/B valuation at -1 SD to its long-term average, house sees this as an opportunity to gain exposure to the start of Noble’s transformation back to an asset-light and high return business model. Barclays maintains its Overweight rating and raises TP to $1.75 (from $1.60).