Noble Group

CREDIT SUISSE on 14 Aug 2012

NOBLE'S 2Q12 revenues rose 23 per cent y-o-y/6 per cent q-o-q to US$24.2 billion, with tonnage at 53.7 million tonnes (+12 per cent y-o-y, +1 per cent q-o-q). Headline net profit was US$194.8 million, which included US$100.3 million in gains on Gloucester post-merger with Yancoal.

The energy segment performed strongly, with revenues up 42 per cent y-o-y, on tonnage growth of 43 per cent y-o-y, helped by an expansion of the US-focused oil/gas platform into Europe/Asia. Sugar mill operations were disrupted by heavy rainfall in Brazil, but should reverse into H2, while grains/oilseeds remained challenging.

The balance sheet remains strong, with US$6.2 billion in liquidity headroom, and gearing at 0.89x (adjusted gearing at 0.40x). Value at risk rose to 0.54 per cent in line with arbitrage opportunities.

Looking ahead, investors are likely to focus on the prospects of demand recovery from H2. We have lowered earnings on agri margins. With the shares 9 per cent from 52-week lows, US$800 million cash in-flows in the next six months on the back of management's capital-recycling initiatives, we stay at "outperform". Adjust TP to S$1.70 (from S$1.75).
OUTPERFORM