Noble Group: Recently saw a sharp pullback in its share price to hit 6-yr low of $0.64. The pullback could be due to weaker outlook for commodities. Also, adding to the volatility is the growing uncertainty over the direction of crude oil prices (Note: Noble has a significant exposure to the energy market, its energy segment made up 84% of 1Q15 revenue).
The recent buying by insider and institutions fail to prop up share price as well. Interestingly, Invesco first upped its stake from 4.99% - 5% on 2 Jun (+1.184m shares @ $0.763 each) and then reduced it back to 4.82% (-12.824m shares @ $0.728 each) the next day.
OCBC believes it will take some time for the market to regain market’s confidence even though it has made efforts to improve transparency and disclosures in the wake of negative reports from Iceberg and Muddy Waters. The house now reduces their valuation peg on the stock from 13.5x to 8x (1SD below the 10-yr average) FY15F EPS and this reduces the fair value TP from $1.05 to $0.61.The HOLD rating remains unchanged as current valuations are not pricy on a historical basis as Noble is currently trading at 0.7x book value.
No comments:
Post a Comment