Noble / Mewah: CIMB previews the outcome for the 2 commodity traders, following Wilmar’s poor results. Note that Wilmar’s results create a sense of foreboding over results of Mewah and Noble, due 28 Feb and suspect Mewah’s margins may suffer as Malaysian refiners lost ground to their Indonesian peers in 4Q11, while Noble’s oilseed-crushing margins may remain under pressure.
Recall that Wilmar disappointed in 4Q11 with its: 1) lower palm & laurics margins due in part to weak refining margins in Malaysia; and 2) weak oilseed earnings owing to stiff competition in China. These raise fears over Mewah’s results, a pure Malaysian CPO refiner, and Noble, which has oilseed-crushing operations in China.
Between the two, Mewah could have harder hit than Noble as Noble has diversified businesses with oilseeds forming less than 20% of its profits. Channel checks suggest that some Msian refiners lost money in 4Q11 as the introduction of Indo’s new export taxes eroded their competitiveness.
Overall, house is inclined to shy away from both stocks until 4Q11 results shed further clarity. Mewah is house conviction Underperform.