Noble

Noble: A fire which burnt through several warehouses and loaders belonging to Copersucar at Santos, Brazil on Friday destroyed 180k tons of sugar. Copersucar shipped about 5m tons of sugar for the 2011-12 eason. Santos Port is a key hub for Brazil’s sugar exports, accounting c.50% of the country’s exports. This event could benefit competing exporters as Copersucar looks towards alternatives to help it meet its obligations as logistics crimp sets in. To date, Noble has invested more than US$1.6b in sugar mills in Brazil but they are mostly still in a gestation phase currently. For 1H13, Noble’s agriculture unit had losses at U$120m vs. 1H12’s operating income of US$98m. Citi maintains Neutral with TP $1.26. Noble is currently trading at 0.9x forward P/B, near the level seen during GFC. While it may be difficult to impute intent, Citi believes that recent investments in firms such as X2 (established by Mick Davis, Trevor Reid and other executives from Xstrata which merged with Glencore in May 2013) and Nyrstar help illustrate that Noble is now back to focusing on its core competence as a supply chain manager.