Update: Noble Group tumbles as buybacks fail to counter commodity slide

[TOKYO] Noble Group Ltd tumbled amid a rout in raw material prices and ongoing criticism of its accounting, even as Asia's largest commodity trader resumed stock buybacks.

The shares sank 11 per cent to end at 50.5 Singapore cents on Wednesday after surging 27 per cent last week. Oil and industrial metals plunged after China devalued its currency for a second day on Wednesday. Noble bought back 12.3 million shares, it said Wednesday, after a two-week blackout period prior to reporting financial results.

At least five brokerages cut their price targets for Noble after it posted a decline in quarterly profit on Aug 10, even as a PricewaterhouseCoopers LLP said its accounting practices comply with rules in valuing long-term contracts. The report, which called for improved governance and changes to way Noble values the deals, failed to deflect longstanding critics including Iceberg Research and former Temasek Holdings Pte manager Michael Dee.

"All the hype around Noble's release is fluff," Dee said by e-mail. "It is not surprising that the market doesn't care." Noble has said the anonymous group Iceberg is backed by a disgruntled ex-employee, and in June described Dee's opinions as "ill-informed." Noble argues the PwC report vindicates its valuations and accounting practices.

The Bloomberg Commodity Index of 22 raw materials dropped as much as 0.6 per cent, falling for a second day, on concern the decline in the yuan will slow imports of copper, oil and other dollar-denominated imports. Noble trades oil, natural gas, aluminum, zinc and coal among other raw materials.

Second-quarter profit fell 4.5 per cent from a year earlier, Noble said Aug 10. DBS Vickers Securities cut its 12-month target price for Noble to 57 Singapore cents from 95 Singapore cents, joining other brokers including Maybank Kim Eng Holdings Ltd, OCBC Securities, UOB-Kay Hian Holdings Ltd and Morgan Stanley.

Noble's shares have lost more than half their value since Iceberg questioned its accounting practices in mid-February. PwC was hired by Noble in July in response to questions put forward by the company's critics.

Iceberg said that the PwC report "fails to address the market's concerns," according to a statement posted on its website on Tuesday. Noble didn't immediately answer an e-mail asking for a response to Iceberg's comments.

Noble's shares rose the most last week since 2009 after the firm brought forward the reporting date of its earnings by three days and said it had been approached by several parties with financing and investing options. The shares are up 9.9 per cent this month.

The stock is the most-shorted on the Straits Times Index, with short interest as a percentage of outstanding shares climbing to record of 14.1 per cent on Aug 6, Markit Group Ltd. data tracked by Bloomberg show.

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