Noble Group (Noble) saw 4Q reported net profit fall 57% YoY to US$106m, but it was an improvement from the US$18m net loss in 3Q11. For FY11, revenue jumped 42% to US$80,732m, or 0.4% above our forecast, while reported net profit slipped 29% to US$431m, it was around 13% above. However, stripping out likely one-off items, we estimate that recurring earnings would have slipped 29% to US$288m. Noble has recommended a final dividend of 1.65 US cents/share, payable in cash or scrip, vs. 2.5 US cents last year.

Although overall net margin slipped from 1.1% in FY10 to just 0.5% in FY11, its various segments have started to show steady recovery. For Agriculture business, operating margin has improved from 1.2% in 3Q11 to 2.8% in 4Q11, but off 4Q10's 10.9% margin. For Energy, operating margin has actually surpassed 4Q10's 1.1% and 3Q11's 1.3% to hit 1.6%. For its Metals, Minerals and Ores (MMO), operating margin also improved from 3Q11's 0.6% to 0.7%, but still way below 4Q10's 2.2%.

Based on 4Q11 results, it appears that the worst is likely over. However, we note that there could still be a dearth of near-term catalyst. While Noble revealed that it expects some development on the Gloucester-Yancoal merger front next week, management does not expect any deal to take place in 1Q12. Management also did not elaborate much on its planned listing of its Agri-business on SGX other than saying it has a new CEO for that division.

While we are increasing our valuation peg from 10.5x (one standard deviation below 5-year mean) to 11.1x (0.5 SD), a lower USD/SGD assumption negates the increase, thus maintaining our fair value at S$1.46. Given the limited upside for now, we maintain our HOLD rating. (Read full report)

CIMB : Noble Group - En-route to recovery