Noble Group

[kbl]

Good morning everyone



<not vested><not a call to buy or sell>



06-03-2015 08:47:54
Iceberg Research sees more writedowns by Noble on Yancoal



SINGAPORE, March 6 (Reuters) - Iceberg Research, the little known research outfit that has criticised commodity trader Noble Group for its accounting practices, said it sees more writedowns the company's investment in Yancoal Australia .

Iceberg's latest statement came after Noble on Thursday pledged to provide more disclosure and issued a strong rebuttal to accusations of improper accounting made by Iceberg.

[ID:nL4N0W71ZK] "The carrying value of Yancoal is now $322 million and the market value of the 13 percent stake is worth $7 million. There is still a $315 million gap that Noble will have to recognise," it said in its latest research.

Noble said this week it only decided to take a $200 million impairment charge relating to Yancoal on the day of its earnings release. It reported a quarterly loss due to Yancoal and other writedowns.

Iceberg has not disclosed the identity of the writer of its report on Noble, only saying that it has been acting as a whistle blower and not as a short seller.

It said it will give more details about the identity of the writer after the third report, following Noble's statement that the contact person for the company behind the report is a former credit analyst at Noble whose job was terminated in 2013.

(Reporting by Saeed Azhar; Editing by Edwina Gibbs) ((Saeed.Azhar@thomsonreuters.com; +65-64035664 ; Reuters Messaging: saeed.azhar.reuters.com@reuters.net)) Keywords: NOBLE GROUP ICEBERG/YANCOAL

[new-comer1]

the stirring continues

[cfa]

Just cant defend the selling pressure , heading down again.

[a74henry]

Directors of Noble Group have been accumulating shares in the market recently. Probably, an opportunity not to be missed for insiders who know the business best since fear has built up into the share price.

[BlueKelah]

Directors of Noble Group have been accumulating shares in the market recently. Probably, an opportunity not to be missed for insiders who know the business best since fear has built up into the share price.

Yancoal has new low today giving it ~AUD50m market cap. Dun think Noble impairment of 200m is enough given their initial carrying value was 600+m. Perhaps they will impair some more every quarter.

Coal prices are also not going any higher given China is planning to clamp down on air pollution and will probably shutter steel factories which are at overcapacity.

Director buying in to try support the share lah. Don't think the story will end well this time without some intervention from a big fund. The cash flow analysis is pretty convincing. Cash flow never lies and is one of the most important things to evaluate.

Iceberg research article...
Comments on FY2014 results and Noble’s rebuttals
["Operating cash outflows
The most important number is the operating cash outflows. Noble lost not less than $1.16b in FY2014 (reported OCF of $1.1b minus interest ($320m) plus additions of cash balances with futures brokers not immediately available for use in the business operations (+$264m).

Since 2009, Noble’s operations have lost more than one billion in cash. Since Mr. Alireza was appointed as CEO, Noble’s operations have lost $447m in cash. In our second report, we explained that Noble will struggle to deliver high ROE, and will be unable to hide its true operating performance. We think Noble cannot stretch its working capital much more (e.g. repos). These predictions were correct.

Iceberg claims that Noble’s fair values are largely fabricated. We do not expect the market to believe us immediately. It took nine months for Enron to collapse and credit agencies downgraded Enron below investment grade only five days before the company filed for bankruptcy. Yet, we strongly believe that every investor, every bank, should be able to answer these simple questions: “Why is this investment grade group unable to generate operating cash flows? Why does Noble bleed cash? Why is there such a divergence between net profit and cash flow?”. Noble has been unable to answer these questions."]

[a74henry]

Melt down over the last 2 days. Let's see if the $0.92 holds tomorrow.

[a74henry]

It is so volatile. It is a darling to traders.

[a74henry]

I was just reading, "Noble Group: What the charts don’t tell you about Noble’s total return" from http://www.investmentmoats.com/stock-mar...al-return/.

Although an old article, I liked the points the writer shared:

1.You can only gain this kind of astronomical returns if you invest in a company that generates increasing profits. The bonus shares and splits are not magic. Having more shares but when profits are falling or for the matter turned into losses would just make this a bad investment. The business, economics and operation matters if you want to hold a company this long.

2.Bonus shares and good dividends appears to be indicative of management that have confidence in their business and prefers you stick with them. In my brief exercise, not many would carry out a bonus share issue. Strangely those that issue bonus shares turn out to be rather sturdy companies that grows.

3.The price you buy matters but it is important to know the value you get. Why we kept advocating buy 50 cent 1 dollar is to buy value buys at reasonable prices. Comparing 2 commodities investment then, you may get more value simply because Noble choose to reward their share holders more.

4.I tried changing the first buy price from 22.5 cents to $3 or $6 and turns out you still make money! You only start losing money if you have bought Noble at $22 in 2001. That to me is pretty amazing.

5.Compounding and time value of money will work if you spot a company that grows its earnings and reward you.

6.Reinvest only in companies with good business, sound management that consistently shows a willingness to reward share holders. Management retires and business environment changes. Noble is in a stage right now where the chairman is struggling to find a successor. We are entering another difficult operation condition. Your dividends will ensure that you receive rewards while waiting. A change from the policy these 10 years (cutting bonus issue and dividend policy) would signal that you need to relook into it.

7.Hindsight is a bitch. This exercise just shows me I missed a great deal.

[a74henry]

One of the director bought another 2m shares at $0.925 bringing his holdings close to 21%.

[a74henry]

Today value closed at $0.93.

Mr Market believes that if the insider buys at $0.925, he is smart enough to buy at an attractive price (supported by fundamentals that insiders know best).

Going forward, Mr Market agrees and those short sellers who sold below $0.925 may suffer loss to cover their positions at a higher price if Mr Market is not selling to them below $0.925.