Company Name: NOBLE GROUP LIMITED
| Research House: UOB KayHian | Price Call: BUY | Target Price: 1.52 |
UOB KayHian tips a strong turnaround in Noble’s 3Q12 results on the absence of cotton-default and carbon-credit losses, improved Brazil sugar-processing volumes, improved soybean-crush margins and firm oil prices. It forecasts a 3Q12 net profit of US$153 million ($188 million) vs 3Q11’s US$18 million loss.
It expects sugar volumes to rise on, with Brazil’s sugar-cane season in full swing, and processing volume should grow on-year, with higher utilization, although profitability could be moderated as 3Q12 sugar prices are down 25% on-year. It notes Shanghai JC Intelligence data show China soybean-crush margins rose to around an average CNY201/ton ($39.3/ton) vs 3Q11’s negative-CNY30/ton, the highest since 4Q10.
“Noble’s stock will be supported by the continued earnings recovery and strengthening balance sheet.” It notes Noble received US$355 million in 3Q12 and expects another US$360 million by January from the Gloucester-Yancoal deal. "With lower net gearing (about 0.9x vs greater than 1x prior 2012) and a stronger balance sheet, Noble is in a good position to capitalize on acquisition opportunities."
It rates Noble Buy, target $1.52. The stock is up 0.4% at $1.295.
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