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Macquarie: Bullish On Noble With More Than 50% Upside!
Aspire, Hot Picks | 15 May 2015
By: Raymond Leung
Articles (142) Profile

Analysts' updates on Noble Group Limited as at 14/05/2015

Noble Group received a lot of attention after its share price dipped due to multiple allegations and many analysts were eagerly waiting for its 1Q15 results. Macquarie Research recently released a report that reflected its strong bullish sentiment towards Noble and the commodity sector in general.

Noble Performed Up To Expectations

Source: Income Statement for Noble Group, Bloomberg

Results from Noble met most of the expectations of analysts from the street and supported Macquarie’s full year estimate for the counter. Noble’s net income of US$118 million for 1Q15 came ahead of analysts’ US$100 million expected and covered 24 percent of Macquarie’s projection for Noble in FY15.

However, the weak operating cash flow took some shine off due to timing issues from the oil segment and net income declined by 37 percent Year-on-Year (YoY). Nevertheless, it is still a substantial improvement for Noble when comparing its 1Q15’s revenue figure with 4Q14′s US$12 million figure.

A “Transparent” Noble Group

Noble’s management made a public statement that the company will be more transparent in corporate governance issues. To tackle Iceberg Research’s multiple attacks regarding transparency, Noble decided to divide its existing businesses into more distinct segments.

The group has provided more detailed figures broken into clearer segments and regions this quarter. Noble is committed to provide quarterly updates on its level three fair value balances that are the hardest to value.

Macquarie’s Recommendation

As Noble’s Return on Equity (RoE) recovers to nine percent from one percent in 4Q14, Macquarie is confident that Noble will be able to recover lost ground to trading at a premium over book value.

Furthermore, worries of investors over its ability to meet obligations have been put to bed after the group secured full commitments for the US$2.25 billion revolving credit facility.

Analysts from Macquarie Research are largely confident about Noble and the industry, giving them a strong “Buy” call. Based on the potential price target of $1.35, Noble has a potential upside of more than 50 percent.

Note: The writer of this article has vested interest in Noble Group.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.


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