Noble

Noble: expect strong trading interest, as the co files application for a possible spin off and listing of its agriculture business on the SGX. Highlights that no final decision has been made on the possible listing proceeding, which will be subject to mkt conditions.

Noble's announcement comes amid a period of market volatility, stirred by worries over a slowing global economy and Europe's sovereign-debt crisis, that has taken its toll on several companies' plans for IPO in Spore. These firms include Fitness First, Manchester United, Fortis Healthcare (India), and BW Offshore, all of which have either postponed their Singapore IPO plans to next year or are considering such a delay.

Given the lack of details, any deal would likely still be at a preliminary stage.
In 1H11, Noble’s Agri biz contributed 21% of group revenue and 59% of group operating profit. It is the 2nd fastest growing segment, with revenue rising 61% yoy, trailing the Energy segment’s 68% yoy growth.

A successful spin off could be positive for Noble sh/h, if higher multiples can be achieved. Closest peer Olam trades at 10.8x P/E, vs Noble at 8.3x. Nomura estimates the Agri biz equity to be worth US$3.3b, or $0.60/sh. Keeps Noble at Buy with TP $2.50.

Interestingly, Australian coal producer, New Hope (A$4.4b mkt cap) said it will consider selling itself after receiving initial takeover proposals from unidentified third parties. New Hope owns coal mines in Queensland, an export coal terminal at the Port of Brisbane and coal projects in New South Wales state.
Recall Noble already owns 63% of Gloucester Coal, recently divested 100% of Donaldson Coal to Gloucester Coal, and has previously made a bid for Macarthur Coal.
Further expansion of the Australian coal business could help boost Noble’s non-Agri contribution, and prime the co further for the Agri spin off.