Asia’s biggest commodity trader by sales, Noble Group, will be reporting its first quarter (1Q13) results next Tuesday 14 May. The stock is currently up 1.3% this week, which is slightly under the STI’s +1.7%, but surpassed the STI’s +0.9% on Wednesday by rallying on the back of counterpart Wilmar’s strong 1Q13 results. Investors may have taken Wilmar’s results as a positive cue on Noble’s results next Tuesday. Counterpart Wilmar’s 1Q13 exceeded expectations
On Wednesday, Wilmar reported a 23% increase in its 1Q13 net profit as earnings at its oilseeds unit rebounded. Wilmar’s oilseeds unit, which incurred a loss a year ago, improved due to higher margins in soybean processing. Higher soybean margins, however, “were a result of lower cost of imported soybeans and higher local product prices, due to late arrival of soybeans in China,” and might weaken in the next one to two months as the delayed shipments start arriving at the end of the month. Wilmar is currently up 4% this week based on its close at $3.42 yesterday. Investors bought 350k of the $3.55 call yesterday.

Noble, which also has a soybean crushing unit may likewise potentially see a recovery in margins. Warrant investors keen to position on a bounce in Noble’s share price may consider trading the below call.

Bloomberg consensus estimates increase in Noble’s sales
Noble had reported a 14% decline in its 4Q12 results on 1 March, which was in line with expectations as revenue at its agricultural unit slumped. The company however, said that they were investing almost US$500mn to expand the unit over two years to revive the business and boost earnings, and recover from what was the worst year in recent history for the agricultural unit. According to Bloomberg estimates, earnings figures for Noble’s 1Q13 are expected to decline from the previous quarter, and expected to recover only in 2Q13. Warrant investors keen to position for a pullback in Noble’s share price may consider trading the below put warrant.

MER ‘Neutral’ on Noble, sees 12-month target price of $1.30
Back in February, Macquarie Equities Research (MER) released with a research report titled “Noble Group – Still a ‘Second Half’ story” with a ‘Neutral’ rating on the stock and a 12-month target price of $1.30.

Source: Macquarie Research - 10 May 2013