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27-02-2017, 11:40 PM
(27-02-2017, 08:38 PM)Hi CY09,Thanks for your analysis it is this kind of facts and analysis that actually provides readers with useful information. Generally I agree with your analysis but for pt 6, the fair value gains but not be attributable to "realised contracts" that have matured. Hence, there will be a difference between cash received and \fair value gains recorded'. More accurate analysis would have been to analyse 2015's fair value that are expiring within 1 year. Also, we can see that somehow the net fair value gains is decreasing, which suggests that Noble might be using contracts with shorter contractual terms and less of those contracts involving Noble repo contract (see pg 72 &73 of audited FS for gross contractual amounts). Overall this seems to be positive - and also debunks Iceberg's myth that Noble is recognising gains only through expanding of the FV gains/losses. Overall, the price should trend upwards once Noble turns cashflow positive in operations, which I am fairly certain will happen, just a matter of six months or one year, and baring no economic uncertainty that crashes the commodity market. Wrote: An improved result from Noble Group.
1) Cashflow is now much stronger through a strong and positive operating cash flow generated before WC changes for FY 16. While after adjustments for WC, Noble indeed is weaker, but this is expected given the accumulating trade payable Noble did over the years; eventually it has to be repaid.
2) Noble's debt has reduced probably due to the bank's asking for a partial repayment ffrom the iceberg saga. The reduction in debt has reduced Noble's leverage ratio from 55% to 42%
3) With a bank debt due 1.3billion in 2017, it is highly likely Noble will be able to repay given it has about 1 bil of cash and ability to draw down on financing lines
4) Noble too has rationalise its manpower with the reduction from 1525 to less than 900 in few months time
5) The sale of its associate and proceeds from rights issue has allowed Noble to fight another year.
6) A small thing to worry about is Noble's "Net Fair value on commodity and derivative instruments". End FY 16, the net gain in fair value stands at 2,776,419,000 while end FY 15, it stood at 3,178,351,000. Noble should have realized approximately 400,000,000 of gains, however cash flow shows its has only realized about 234,234,000 in gains ( 60% of amount).
http://infopub.sgx.com/FileOpen/SGX%20wi...eID=440908
http://infopub.sgx.com/FileOpen/FY2016%2...eID=440907