Noble

Noble: Even the street cannot agree on the read through for Noble’s 3Q13 results. There is at least one analyst from each house saying that the results either beat, underperformed or came in line with consensus expectations. Noble reported net profit of just US$23m, but adjusting for the ~US$90m in its share of write-offs on Yancoal assets (expected to an extent by the market), Noble’s core earnings was US$113m – the best 3Q in three years. Agriculture showed a recovery in 3Q13 with gross profit of US$14m, an improvement from the 2Q13 loss of US$54m This was driven largely by an improvement in crush margins in China, as well as re-alignment of its grains origination capacity in Brazil. While its Brazil sugar mills have seen improved operational efficiency as capacity has ramped up, this has been offset by lower volumes due to wet weather. Energy continued to perform well with 3Q13 gross profit of US$339 mn, representing a 55% YoY increase. Also the group’s gas and energy solutions businesses delivered strong contributions. The metals platform however, remains a concern, as 3Q13 volumes fell 14% y-o-y and GPT tightened 10% y-o-y. The timing for delivery of margin improvements as a result of the realignment the segment is going through is unclear. Nomura reiterates Buy with TP $1.15. Expects the stock reaction to be neutral to positive. Nevertheless as the stock has recovered decently from its $0.80 lows a few months back, and is now at a slight premium to book at and at 11x CY14e P/E, near term upside may be capped. Expects the stock to remain range-bound in the near term. HSBC downgrades to Underweight, cuts TP to $0.94 from $0.97. The house is unimpressed by the agri recovery, and believes continuing bottlenecks in the agri and metal segments mean earnings visibility is poor. Credit Suisse maintains Underperform with TP $0.90, based on 0.9x P/B.