Noble’s Chairman, Richard Elman, told investors at the Credit Suisse Asian Investment Conference in Singapore that Noble is seeing opportunities and is confident of another bull market for commodities in a few years. With the world population growing at 2-3%, as well as the industry being unable to keep up, these would lead to another recovery in the market and prices will follow. He also took the opportunity to highlight that Noble has been approached by a major commodities firm to market their products in China, an attest to Noble’s ability.

Noble’s stock closed at $1.17 on Wednesday, representing a gain of 1.3% year-to-date and a decline of 0.9% day-on-day.

Recent net income met analysts’ estimate
Net income at Asia’s biggest commodity trader fell to US$91.2 million from US$105.7 million year-on-year, meeting the US$91 million average estimate of five analysts surveyed by Bloomberg. Full-year profit climbed 9% to US$471 million while revenue spiked 16% to a record US$94 billion.

Revenue at its agricultural unit dropped for the third straight quarter in the midst of a drought in Argentina. The Agricultural unit, second largest division in Noble, will receive around US$500 million of investment for expansion over the next 2 years. 

Bond issuance, joint venture
To strengthen its balance sheet, Noble has issued US$820 million worth of bonds in Malaysia ringgit, Chinese yuan and US dollars. They are meant to be used towards refinancing its US$500 million bonds maturing in May and another bank debt worth US$685 million. These new bonds yield between 3.6% to 4.3%, compared to the maturing debt of 8.5%.

Mr Elman had also mentioned that the initial debt turned out to be moderately expensive, and such a move would make a “substantial difference” to Noble’s bottom line. 

Joint venture with Wilmar
In February, Noble announced a joint venture (JV) with Wilmar to develop and operate palm projects to produce and sell crude palm oil and its by-products in Papua, Indonesia. Through the JV, both Noble and Wilmar will be working together to explore and develop further palm oil opportunities in the Papua region to add to their existing portfolio.

Noble and Wilmar are both components of the STI. According to Bloomberg as of 20 March, Noble has a market capitalisation of $7.6 billion with Wilmar clocking in at $21.6 billion.

Source: Macquarie Research - 21 Mar 2013