• Can buy back another 574.2m shares
• CIC will continue to support Noble’s business
• Eyeing CIC’s next move

Made more share buybacks

Noble Group (Noble) has continued to buy back its own shares – the latest is another chunk of 14m shares at S$0.69445 each for a total of S$9.75m. To date, the company has bought back a total of 119.71m shares, or around 1.78% of its outstanding share base. Based on the company announcements, Noble bought back these shares between S$0.6692 and S$0.7138, or at a weighted average of S$0.6926/share. Note that Noble has a mandate to buy back no more than 693.95m shares; the latest purchase means that the company has used up 18% of that mandate.

CIC will continue to support Noble’s business

Separately, Noble announced that it has appointed Mr Yu Xubo (Patrick) – President of COFCO Corporation – as a non-executive director of the company; this as the replacement for Mr Li Rongrong whose term has expired. According to Noble, Patrick played a key role in the formation of the JV between COFCO and Noble Group via Noble Agri, and that the group will benefit from Patrick’s unique breath of business and industry knowledge. Also in the announcement, Mr Xie Ping – EVP of CIC – was quoted as saying “as a major shareholder of Noble Group, we will continue to support its business.”

Eyes will be on CIC’s next move

While the verbal confirmation is a positive boost, we suspect that the market will be looking for CIC to do more i.e. put its money where its mouth is and increase its stake in Noble. Recall that CIC had previously pared its stake from nearly 15% to ~9% by selling 300m shares at S$1.32 each on 30 Sep 2014 (it had paid S$2.11 for its stake in 2009, or S$1.37 after adjusting for the 6-for-11 bonus issue).

Revising FV to S$0.69

In light of the recent share buybacks, we believe that the share price will remain supported for now. As such, we bump up our fair value from S$0.61 to S$0.69, now based on 9x FY15F EPS (versus 8x previously). But as the medium-term outlook remains somewhat muted, we retain our HOLD rating on the stock.

Source: OCBC Research - 25 Jun 2015