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Noble tumbles ahead of meeting with investors: Will it say enough?

Monday, August 17, 2015 - 09:39
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Noble Group shares traded lower on Monday ahead of the management's meeting with investors later in the afternoon.

NOBLE Group shares traded lower on Monday ahead of the management's meeting with investors later in the afternoon.

Noble was trading around S$0.46 a share, down 3 Singapore cents, or 6 per cent at 09:29am. More than 12 million shares changed hands.

At 2pm on Monday, the Hong Kong-based commodities group will present an explanation of how its business works, its interim results and the findings of the PricewaterhouseCoopers (PwC) Assurance Opinion, with a full and open Q&A session at the Ritz Carlton Hotel in Singapore.

The Business Times understands that Noble is holding a separate meeting with sell side analysts this morning.

"The key question today is whether Noble will provide additional information beyond what was said during its 2Q15 results call last week including the proportion of profits booked up front from off take agreements...Clearly what was provided thus far has not been sufficient, with the stock price down 16% over the past week,'' said Mervin Song, an analyst with DBS Group Research.

Mr Song noted, "Noble's previous stance that it will not provide detailed information on specific transactions or deals due to competitive and confidentially reasons which is understandable, there is a possibility that today's event will not scare away the short sellers or satisfy Noble's critics.''

"Thus, the next catalyst will be an update from Noble on the approaches it has received,'' he said.

Last week, Noble reported a 5 per cent drop in net profit for the second quarter ended June 30 to US$62.61 million, dragged by commodity pricing pressures. Revenue for the quarter saw a 22 per cent slump to US$18.36 billion.

The associate value of Yancoal, recognised as an associate on its balance sheet, has declined from US$825 million upon closing of the merger in 2012 to US$306 million as at June 30 due to the losses incurred by Yancoal and impairments. Noble had acquired its 13.2 per cent stake in Yancoal via a sale of 100 per cent of its shares in Gloucester Coal into Yancoal Australia.

While PwC said that the commodities trader adhered to international requirements and standard industry practices when valuing contracts, that provided little relief to the market which felt the mandate was narrow as the issue of whether valuations were reasonable or misleading were not addressed.

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