Noble

Noble: Key Takeaway from Co’s Placement of new shares and outlook. Recall that Noble entered into a placement agreement for 306m new shares (5% of outstanding) at $2.07/share. Co. cited reasons for placement as apart from funding its new acquisitions, to increase working capital requirements from high commodity prices, and intends to maintain its investment grade credit rating…..

Add that Oil, gas and power businesses performing to expectations, and Noble sees synergies with Natural Gas, but has not identified suitable investments. Note that Agriculture business has critical mass, with recent investments into sugar processing, edible oil refining and oil palm plantations. Segment is now large enough to stand-alone and grp may consider a spin-off in the future, but currently

Co. however is out of the running to develop part of Mongolia’s coal assets, after 6 major global grp’s were shortlisted, which included Vale, Xstrata, ArcelorMittal, Peabody, a venture between Mitsui and Shenhua grp and OAO Russia, denting hopes to further expand into Mongolia, where Coal was the country’s top export last yr…..

Placement will reduces the proforma Dec2010 net debt from US$4.2b to US$3.7b and the proforma RMI adjusted net debt from US$523m to US$30m, causing net gearing to drop from 106% to 83%, and increases NBV/sh from US$0.659 to US$0.705 and NTA/sh from US$0.583 to US$0.633….

Street generally view placement as a sensible top-up fund-raising on the back of solid FY10 results, as maintaining an investment credit-grade rating is important both in terms of capital cost and acquisition/expansion funding capability. Also noteworthy is CIC’s subscription to maintain its effective interest despite the lack of progress on joint agricultural ventures as initially envisaged. Street generally has a unaminous Buy Call on counter with a Mean TP of $2.68.