Hot stock: Noble slides as OCBC cuts target price to S$0.61

Published Thu, Jun 11, 2015 · 03:20 AM

SHARES of Noble Group retreated from early gains on Thursday as OCBC cut its fair-value estimate of the stock by more than a third.

Shares of the commodity trader were unchanged at 64.5 Singapore cents as at 10.54am on Thursday after hitting as high as 66 Singapore cents earlier in the day. The stock was the most heavily traded in the morning, with 28.7 million shares changing hands.

In a report, OCBC trimmed its target price for the stock to 61 Singapore cents from S$1.05 amid ongoing uncertainty about its accounting practices and a weaker outlook for commodities. The new valuation is pegged to eight times estimated earnings, instead of the 13.5-times multiple that the broker previously used. OCBC maintained its "hold" rating.

OCBC said questions raised about Noble's accounting practices by Iceberg Research and Muddy Waters, as well as by veteran investor Michael Dee, continue to weigh on market confidence in the company.

The commodity sector is also struggling.

"More importantly, we believe that the recent pullback could be due to a weaker outlook for commodities, which comes on the heels of a 'new normal' for China, that is, slower economic growth," OCBC wrote. "Also adding to the volatility is the growing uncertainty over the direction of crude oil prices."

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