Noble Group (Noble) unveiled its new CEO – Mr Yusuf Alireza – who will start his appointment on 16 Apr. Mr Alireza, formerly of Goldman Sachs, has been one of the fore-runners for the post and the appointment does not come as a total surprise. Meanwhile, the current price recovery (up 27% YTD) seems to have factored in most of the positives, including the appointment of a new CEO. Hence, we are only upgrading our call to HOLD, albeit with an improved S$1.46 fair value. We would be buyers closer to S$1.30.
Appoints new CEO
Noble Group (Noble) unveiled its new CEO – Mr Yusuf Alireza – who will start his appointment on 16 Apr. Mr Alireza, formerly of Goldman Sachs, has been one of the fore-runners for the post and the appointment does not come as a total surprise. In any case, Noble’s share price has already staged a remarkable recovery since the start of the year, rising some 27% YTD, and was again up 3.2% yesterday ahead of this latest development.
Market sentiment improving, lifted by US & China
The stock price recovery could well be buoyed by the rapid improvement in market sentiment, especially after reassuring data points from both the US and China, despite the still-uncertain debt crisis in Europe. We note that increased liquidity in the market is probably another key reason behind the recent market rally. Furthermore, investors also naturally gyrate towards high-beta stocks like commodity plays to maximise any market movements.
Upgrade to HOLD with S$1.46 fair value
While the market appears to be anticipating a rather strong recovery, the global economy is by no means out of the woods yet. As such, any adverse news could still bring about a hefty pullback. Nevertheless, in line with the improved sentiment, we are raising our FY12 earnings estimate by 23%, mainly due to higher margin assumptions. We are also raising our valuation peg from 9x (1 standard deviation below its mean to 10.5x (0.5 SD below mean), which in turn raises our fair value from S$1.02 to S$1.46. However, the current price recovery seems to have factored in most of the positives, including the appointment of a new CEO. Hence, we are only upgrading our call to HOLD. We would be buyers closer to S$1.30.
Market sentiment improving, lifted by US & China
The stock price recovery could well be buoyed by the rapid improvement in market sentiment, especially after reassuring data points from both the US and China, despite the still-uncertain debt crisis in Europe. We note that increased liquidity in the market is probably another key reason behind the recent market rally. Furthermore, investors also naturally gyrate towards high-beta stocks like commodity plays to maximise any market movements.
Upgrade to HOLD with S$1.46 fair value
While the market appears to be anticipating a rather strong recovery, the global economy is by no means out of the woods yet. As such, any adverse news could still bring about a hefty pullback. Nevertheless, in line with the improved sentiment, we are raising our FY12 earnings estimate by 23%, mainly due to higher margin assumptions. We are also raising our valuation peg from 9x (1 standard deviation below its mean to 10.5x (0.5 SD below mean), which in turn raises our fair value from S$1.02 to S$1.46. However, the current price recovery seems to have factored in most of the positives, including the appointment of a new CEO. Hence, we are only upgrading our call to HOLD. We would be buyers closer to S$1.30.
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