Wednesday, January 14, 2015

Noble Group

Noble Group: The Business Times reported that Noble’s sell-down yesterday could be due to on-going speculation that China Investment Corporation (CIC), Noble’s second largest shareholder, could be doing another round of divestment in Noble. A block sale of 5.2m shares was transacted yesterday, leading to rumours that an investor with a sizeable block was disposing its stake, with some alleging CIC to be the culprit. Earlier in Sep ’14, Noble’s share price tumbled ~7.1%, after CIC divested about 1/3 of its stake in Noble. Separately, some market watchers cited that the selloff could be due to the recent plunge in oil prices, with the energy business contributing to at least 70% of Noble’s revenue. Noble derives a fair bit of business from shale gas, although the group has reiterated that it is not an asset owner, but rather facilitates the trade flows of shale gas. Yet, should the volume of shale gas being produced decline, Noble could also be impacted. Going forward, sentiment on the group appears divided in light of the volatile oil and commodity prices. Some analysts are guiding that shale still remains a new area for Noble, and that the group has traditionally been able to trade well in its other energy asset classes during volatile markets. Meanwhile, the lower commodity prices could also represent an opportune time for Noble to scoop up more assets and expand its market share, following its 51% stake sale of its agriculture business to Cofco in Sep ’14, which will see the group receive some US$1.5b of proceeds. Noble currently trades at 10.2x forward P/E versus Olam’s 11.8x and Wilmar’s 13.6x.

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