Company Name: NOBLE GROUP LIMITED
| Research House: Citigroup | Price Call: BUY | Target Price: 1.68 |
Noble is entering a capital-deployment phase after its capital recycling from the concluded Yancoal/Gloucester and Tenmar deals, which would increase its 2Q12 cash position of US$1.4 billion ($1.7 billion) by 55% and reduce net gearing by half from 30%, Citigroup says. The proposed transaction to acquire Arrium is a start for capital deployment, it says.
“Noble is looking to reshape its metals and ores segment into a similar model as its successful energy/coal business which is based on flow management for long-term clients. Noble’s MMO division is now its smallest profit contributor at only 8% of its profit pool in 2Q12, a sharp contrast to 1Q10 when the segment contributed to 38% of its profit pool.”
Citigroup adds, the worst of Noble’s negative earnings-revisions cycle is likely over, with the stock-price bottom likely marked. “Noble also screens well from the perspective of generating performance in both QE1 and QE2. From Singapore’s stock market perspective, industrials and resources were the two stock categories that performed well in the three months post QE1 and QE2.”
It rates Noble Buy with $1.68 target. The stock is down 2.3% at $1.29.
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