Noble Group

(02-04-2017, 02:07 PM)realanalyst Wrote: Noble Group growth seems very artificial,  volume is at any cost in order to compel name recognition.
A great deal of crictism should be levelled at them for their lack of financial substance.

https://noblegroupresearch.wordpress.com...ble-group/

The audited inventory-in-transit, the level of RMI, and the peers analysis both place Noble as a company with implied revenues 11X to 12X less the amount reported.
Inventory-in-transit of $2.6M for a company for a  cost of goods sold of $48,58B in 2016 ?
Noble is not a $97.6B sales company.

Inventories-in-transit? Base on Noble latest 2016 AR, the inventories was about US$ 1.6 billion, with the cost of inventories and service of about US$48 billion, rather than the "$48,58B (!)". 

Based on AR 2016, total employee count was 1000, thus revenue per employee was about US$46 million per staff, probably not too far from the article "normal range"(?)

The MC of Noble is S$2.6 billion (or US$1.9 billion), the P/S is 0.04x (with Sales in 2016 of US$46 billion). For comparison, Olam was 0.26x, and Wilmar 0.38x. I have taken it as positive, especially after the recent strengthening of its balance sheet.

I am not saying Noble is a good bet, but I can't find most of the "weakness" in the article from the fundamentals of the company.

It is punting rather than trading, MDs with limited trading views constantly fight the HQ punting for more working capital. Growth seems very artificial, volume is at any cost.
Borrows at nearly 9%, but what kind of gross margins can allow to break-even ?
This is the also company who has burned $900 millions in OPERATING CASH-FLOWS in 2016 but printed an accounting profit…
I guess it's a winner

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On Dec 31th 2016:
inventories: US$ 1.6B but the the Inventory-in-transit audited by EY is less than $2.6M. Opss
222 Million metric tons for $48,58B sales ?

https://noblegroupresearch.files.wordpre...ransit.png

Still report a positive net equity of $3.46B and an accouting profit figure how...
burnt $900M in 2016 and ... -$900M in Y16-$600M in Y15. -$1600M in Y14 in operating cash-flows.

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Just know that Noble has been battling liquidity issues for months and any trader like them could have sold these contracts to an investor like Temsasek a long time ago if they were valued correctly.
Noble Group has a credibility and a financial substance problem
I just don't know what kind of financial analyst can put a buy recommendation on this

Not vested.

<merged by moderator, CY09 as posts were recently posted>

Noble got sold down again , is market anticipating poor result in next Q to be announced next week ?

(04-05-2017, 01:46 PM)cfa Wrote: Noble got sold down again , is market anticipating poor result in next Q to be announced next week ?

It is probably due to the share consolidation, rather than coming 1Q result

Noble shares plunge 9.8% in big sell-off on negative sentiment

Noble Group was hit by a big sell-off yesterday, as market confidence sank further despite assurances of a long-term turnaround given at last Friday's annual general meeting.

Instead, some shareholders were irked by a move by management to consolidate shares.

Noble shares plunged 9.79 per cent or 1.4 cents yesterday to their lowest point so far this year at 12.9 cents on 179.17 million shares done.
http://www.straitstimes.com/business/com...-sentiment

While, it may be true that share consolidation has a bias to push down share price, after actual consolidation has take place...but this has nothing to do with business fundamentals. Although, one might argue that a change in share price could trigger a reaction to confidence and hence have secondary effects on the liquidity risk of a highly leveraged business.

This is the same with share split, nothing to do with business fundamentals, but as chialc88 noted in the BestWorld's thread, that could cause trading liquidity to increase and become a secondary effect to increase price-valuation gap.

The fact is even if the fundamentals of the business improve , and the share price still remain in the 'penny range ' , institutional investors will not consider to include it on their radar screen .

(05-05-2017, 10:15 AM)cfa Wrote: The fact is even if the fundamentals of the business improve , and the share price still remain in the 'penny range ' , institutional investors will not consider to include it on their radar screen .

I agree. The consolidation will reduce retail speculation, and increase the institutional investments.

Noble Group Sinks to 2003 Low as S&P Says Debt Is Unsustainable

by Jasmine Ng  and David Yong
May 11, 2017, 9:40 AM GMT+8 May 11, 2017, 1:30 PM GMT+8

Noble Group Ltd.’s shares plunged to the lowest level in 14 years after it warned of a first-quarter loss and as S&P Global Ratings said the commodity trader’s debt-load is unsustainable given its current earnings path.

Shares of the Hong Kong-based company, which counts China Investment Corp. as one of its largest shareholders, slumped as much as 23 percent to S$1.00, the lowest since February 2003, before trading at S$1.015 at 1:12 p.m. in Singapore. This means Noble’s market value has shrunk to less than $1 billion in U.S. dollar terms, a shadow of its former self.

Noble said Tuesday it will record a $130 million net loss in the first quarter because of wrong-way bets on coal prices and dwindling liquidity, compared with a profit of $40.5 million a year ago. That’s just the latest in a string of setbacks for Noble, once the largest commodity trader in Asia, which has been selling assets and cutting costs to prop up its finances after a torrid few years marked by losses, credit-rating downgrades and a share-price collapse.

“If you assess their earnings power of the past one year, based on the current profit runway, their debt-load is not sustainable,” said Danny Huang, director of corporate ratings at S&P in Hong Kong, adding that bank support remains important for Noble. “The headline loss of $130 million doesn’t look very good and we have to see what are the reasons for that, even though one would be reasonable not to expect them to report a huge recovery.”

More details in https://www.bloomberg.com/news/articles/...ing-losses

Looks like the management has finally exhausted its credibility and investors are capitulating now. Everyone gets what they deserve from the market, the red flags were there, many raised reasonable doubts, those who chose to ignore them only have themselves to blame.

(12-05-2017, 10:36 AM)lilvestor Wrote: Looks like the management has finally exhausted its credibility and investors are capitulating now. Everyone gets what they deserve from the market, the red flags were there, many raised reasonable doubts, those who chose to ignore them only have themselves to blame.

Will they do another rights issue? Can the new management turn it around with huge debts (8% IR?). Will they fall with China soveirgn wealth fund having a stake, abeilt reduced one. Takes a lot of conviction. Ttempted to take a small punt.