Noble Grp

Noble Grp: Announced 1Q12 results which were in-line on an adjusted basis. Rev at US$22.8b, +14% yoy and +13% qoq, while headline net income for the quarter was US$110m, and after adjusting for losses from supply chain assets, adjusted net income was US$136m (-10% yoy and +88% qoq). While the agriculture segment was much weaker than expected (segmental operating profit down 63% yoy with single-digit margins), there was a stronger-than expected performance from both Energy as well as the MMO segment, whereby the diversity of grp’s business platform helped Noble to perform credibly in 1Q12. Key takeaways from 1Q12 conference call and results review with CEO: its diverse business platform, (ii) impressive risk management tools and (iii) confidence in management stability. Also flagged ‘new frontier opportunities’ such as Shale gas, Mongolia and Africa. Noble emphasized its strong liquidity position with cash & unutilized committed facilities of US$6.5b, add that weak qtr for agriculture on the back of higher operating costs given incremental ‘two’ sugar mills (no revs booked from sugar) and weak crush margins. Strong qtr for Energy was due to expansion of coal marketing and 4x increase in Gas & Power volumes, while MMO also improved on the back of Aluminum business and GCL-Yancoal merger on track with shareholders’ vote on 4 Jun12. Technically, see support at $1.10. Overall ratings as follows: JP Morgan maintains O/w with $2.20 TP - Likely to see ‘better performance’ in 2Q12 & 3Q12 Nomura maintains Buy with $1.70 TP – Results much better then house estimates Goldman Sachs neutral with $1.50 TP – Believe mkt may take these results positively UOB Kay Hian maintains Buy with $1.80 TP – Energy leads the way