Noble

Noble: FY10 results beat expectations. Net profit of US$606m, +8.9% yoy, came in 26% above consensus. This was boosted by 4Q10 net profit which grew 94% yoy, underpinned by robust volume growth (physical tonnage +29%) and margin expansion (gross profit +48%), as past investments came on-line. Proposes div of US2.5cts...

The agri segment outperformed, supported by the grains and oilseeds division, as improved physical throughput from the Argentinean crushing plant and Brazil port storage facilities started to contribute. Also crushing margins in China remains locked-in and healthy, in-line with mgt’s 2Q10 guidance. Sugar volumes increased 83% yoy as the new Brazilian sugar-plant began partial operations...

The Energy segment however, was negatively affected by mgt’s decision to reduce activities in the carbon credit market (Noble is one of the largest players) due to structural changes. Apparently some impairment charges were taken. While undisclosed, this could form the bulk of the US$74m impairment on supply chain assets...

Going forward, 2011 will see further invmts come onstream to further push profitability towards mgt’s FY2013 US$1b net profit target. Further volume growth and margin expansion form the backbone of most analysts’ forecasts...

Separately, mgt sees Mongolia as its next opportunity to expand in coal in 2Q11, and plans to develop a similar model there to what is currently in Indonesia and Australia. Noble bought 4.1% of Aspire Mining, which explores for coal in Mongolia, in Jan ’11. Meanwhile Xanadu Mines, which plans to develop coal and iron ore fields in Mongolia has also struck an alliance with Noble in early Feb...

Post results, most houses keep at Buy with targets ranging $2.50-2.75.
HSBC raises TP to $2.74 from $2.58.
JPM raises TP to $2.75 from $2.50.