Morningstar

Morningstar, Inc.

Equity Bottom-Up

No-moat Noble Group has raised new debt of USD 1.75 billion over the past month, which is within our expectation given that there was around USD 1.8 billion in net debt repayment in 2016. Given our revenue and working capital assumptions, we think Noble can manage without raising further significant debt this year but we anticipate a net addition of around USD 1 billion in new debt per year going forward in our explicit forecast period to 2021. While we had already factored in the debt raising…

Our fair value estimate for no-moat Noble Group is little changed, rising to SGD 0.18 from SGD 0.17, following the release of the company’s 2016 full-year results. We’re a little disappointed with the low profit on its energy trades and have lowered our assumptions for its near-term trading margins reflecting the impact of hedges limiting gains in a rising price environment. However, the company’s 2016 net profit of USD 252.1 million (USD 8.7 million excluding profit contributions from business…

Noble Group’s share price has jumped in recent days following the revelation that it is in discussion to bring in a strategic shareholder that will strengthen the company’s financial position. At this stage, we retain our fair value estimate at SGD 0.17 ahead of the company's full-year results release on Feb. 23. We think upside to our fair value estimate could come from signs of improving working capital efficiency that would help alleviate the need to rely on more debt to fund its trading…

Singapore

Noble Group Limited manages a portfolio of global supply chains covering a range of industrial and energy products. The Company facilitates the marketing, processing, financing and transportation of essential raw materials by sourcing bulk commodities from regions in South America, South Africa, Australia, Indonesia and supplying high growth demand markets in Asia and the Middle East.

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