Saturday, November 16, 2013

Noble Group Ltd: Improvement seen in 3Q13 (OCBC)

Noble Group Ltd:
Fair value S$1.03
add: 12m dividend forecast S$0.030
versus: Current price S$1.08
Improvement seen in 3Q13

Noble Group (Noble) reported its 3Q13 results last evening, with revenue rising 13% YoY to US$25,595m, buoyed by revenue growth from all three business segments. Excluding non-cash Associate loss of US$103m, core earnings would have come in around US$113.0m. 9M13 revenue of US$73,524m met 74% of our full-year forecast; core earnings of US$194.1m would have met around 64% of our FY13 estimate. Going forward, management says it will continue to focus on long-term efficiency gains made from recent initiatives to reduce SAO and finance cost; also taking full advantage of the current downturn to add significant off-take and marketing agreements. We are upgrading our call from Sell to HOLD with higher S$1.03 fair value (versus S$0.76 previously) to reflect improved outlook.


3Q13 Associate loss is non-cash
Noble Group (Noble) reported its 3Q13 results last evening, with revenue rising 13% YoY to US$25,595m, buoyed by revenue growth from all three business segments. Although reported net profit slipped 70% to US$22.9m, Noble noted that core earnings would have come in around US$113.0m if the non-cash charge of US$103m from its share of Yancoal's loss was excluded. 9M13 revenue of US$73,524m met 74% of our full-year forecast; core earnings of US$194.1m would have met around 64% of our FY13 estimate.

Agriculture business back in the black
As expected, the Energy segment was still its star performer. In addition, we note that its Agriculture business has done well, going back into the black with US$14m of operating profit (versus losses of US$54m in 2Q13 and US$67m in 1Q13). Noble noted the improved performance came from some recovery in crush margins and reduced disruption to the grains and oilseeds origination flows. However, management remains cautious as to the medium-term outlook.

Still focused on cost efficiencies
Going forward, management says it will continue to focus on long-term efficiency gains made from recent initiatives to reduce SAO and finance cost; this after revealing that SAO and gross finance cost in the past four quarters fell by a total of US$128m versus comparable prior period. Noble adds that it is taking full advantage of the current downturn to add significant off-take and marketing agreements.

Raising FV to S$1.03; upgrade to HOLD
As results were mostly in line, we opt to keep our estimates largely unchanged. Our fair value though rises from S$0.76 to S$1.03 (based on 11x FY14F EPS versus 10x blended FY13/FY14F previously to reflect an improved outlook). We also upgrade our call from Sell to HOLD.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 13/11/13

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