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Broker's take: Macquarie says Noble still deep in the woods, cuts rating to underperform

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Macquarie Capital Securities has cut its rating on Singapore-listed commodities group, Noble, to underperform from neutral.

MACQUARIE Capital Securities has cut its rating on Singapore-listed commodities group, Noble, to underperform from neutral.

The research house said "with significant headwinds - both old and new - buffeting both its top line and margin drivers, Noble is still deep in the woods".

Residual hopes of a leaner, asset-light Noble being able to return to profitability were dashed with the announcement of its Q1 2017 net loss. On Thursday, Noble reported a US$129.35 million net loss for Q1 2017, compared to a net profit of US$40.48 million a year ago. Founder and chairman Richard Elman, in announcing board changes on the same day, also said Noble would most likely regain profitability in the 2018/2019 financial year.

"We now pencil in a clean net loss for 2017 estimate and cut our 2018 estimate earnings in US$ by 42 per cent,'' Macquarie said, adding that it has cut its target price by 50 per cent to S$0.70 a share, from S$1.40 previously.

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At 02:39pm, Noble was hovering around S$0.68 a share, down 19.50 Singapore cents, or 22 per cent. More than 108 million shares were traded.

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