This QE move occurs at a time when Beta is the cheapest in years (relative valuation high beta vs. low betaâ¦).
As a result the moves this time could be even more exaggerated. In our view, the best Beta Plays (high beta + high upside to JPM TP) are NOBL (1.75x Beta, 16% upside to TP); SMM (1.45 Beta, 15% upside), IFAR (1.37 Beta, 22% upside).
We believe Nobleâs stock will be supported by the continued earnings recovery and strengthening balance sheet. Noble received US$355m in 3Q12 and expects to receive another US$360m by Jan 13 as a result of the Gloucester-Yancoal deal.
With lower net gearing (about 0.9x vs >1x prior 2012) and a stronger balance sheet, Noble is in
good position to capitalise on acquisition opportunities. Noble recently announced its participation in a consortium which had bid for mining and materials company Arrium, although the bid was rejected by the target.
Noble is down 11% now, as it is the subject of a short-seller's report dated 15 Feb 2015. New name in the short-seller space : Iceberg Research. Easier to make money by short-selling and writing a damning report, eh?
SINGAPORE/HONG KONG (Reuters) - Singapore-listed Noble Group's 30 percent share-slump over the past month has thrust it on to the radar screens of Asian companies that want a bigger clout in global commodities trading, people familiar with the matter said.
Chinese and Japanese companies have held informal talks with investment banks about potentially making approaches to Hong Kong-headquartered Noble, a Singapore-based banker aware of the matter told Reuters, even though founder and top shareholder Richard Elman has been keen on the group staying independent.
Noble's market value has shrunk by $1.8 billion since little-known Iceberg Research accused it in mid-February of inflating asset values by billions of dollars through aggressive accounting. Noble has rejected the claim and linked Iceberg to an employee it fired in 2013.
Noble shares were up nearly 6 percent in early trade on Friday, valuing the company at about $4.4 billion, after the company announced that shareholder and British insurer Prudential PLC had increased its stake to just over 5 percent.
Large companies that control the supply chain in raw materials such as Noble appeal to Chinese and Japanese firms that are looking to increase their pricing power and control costs in the commodities industry.
"The stock slump is flushing out buyers," said the banker. "Noble has been very focused on staying independent but it's hard to see it staying that way now after the price fall and accounting issues," he said.
The banker declined to name the potential suitors as the talks were confidential. Other M&A bankers who have worked with Chinese state-owned companies mentioned China Minmetals Corp, Brightoil Petroleum (Holdings) Ltd and Singapore state investor Temasek Holdings [TEM.UL] as potentially interested parties in acquiring Noble.
Bankers cautioned though that there were no active discussions between Noble and potential suitors and it was unclear whether any interested parties would actually proceed with a proposal.
The sources declined to be identified as the discussions are confidential. Brightoil declined to comment, while a Beijing-based spokesman for China Minmetals said he was not aware of any such plans. Temasek declined to comment on "speculation".
Noble, in response to questions from Reuters, declined to comment on any likely suitors, adding its focus remained on "ensuring that we run our day to day business as efficiently as possible".
SCARCITY VALUE
Elman, 75, who began his career in a scrap yard in England at the age of 15, has transformed Noble into one of the world's biggest suppliers of commodities from coal and iron ore to coffee. The energy business accounts for the bulk of its revenue and profits.
"There is a scarcity value attached to Noble because there are hardly any listed commodity players," said the Singapore banker.
Last year, a Temasek-led consortium made a buyout offer for agricultural commodities trader Olam International Ltd, more than a year after short seller Muddy Waters raised questions about Olam's finances, sparking a stock slump.
Elman, who has recently raised his stake to nearly 21 percent in Noble, though is unlikely to be pressured into a sale, despite the slump in prices of several commodities, people familiar with his thinking said.
"Elman is known to hold a multi-decade view on commodity prices. He is not the one to sell at the bottom of the cycle," said one person who has previously advised Noble.
It was not immediately clear what Noble's other significant shareholders think about a sale. China Investment Corp (CIC), Orbis Investment, Templeton and INVESCO cumulatively own more than 27 percent of the company, Reuters data shows.
Bankers say CIC's 9.4 percent stake in Noble would make it easier for a Chinese state-owned company to propose an offer.
CIC and Templeton didn't respond to a Reuters query, while INVESCO and Orbis declined to comment.
(Additional reporting by Saeed Azhar in SINGAPORE and Deena Yao in HONG KONG; Editing by Muralikumar Anantharaman)
Noble Group Limited (“Company” or “Group”) refers to the statements made by Iceberg Research (“Iceberg”) in their three reports.
We reject their allegations as inaccurate, unreliable and misleading.
As a public company a public company we support responsible research.
However, Iceberg are not the independent research house they claim to be. Their actions, and their timing, have been calculated primarily to inflict damage rather than to facilitate the distribution of research.
We recognise our responsibility to protect the interests of our investors and we are in constant dialogue with our business partners who have continued to show their strong support.
Now that the third report has been issued, we have examined every aspect of all three reports with our lawyers.
Later today we will start legal proceedings against Arnaud Vagner, a resident in Hong Kong, Enlighten Ace Ltd, a Seychelles company and any associates, at the Hong Kong High Court for conspiracy to injure Noble Group.
The management have been, and will remain, focused on running the Company.
Arnaud Vagner was a credit analyst with Noble in Hong Kong from March 2011 but his employment was terminated in June 2013 for "misconduct" relating to "his disruptive behaviour". Previous to that he had worked at a bank in Hong Kong.
Noble will be filing its writ against Mr Arnaud and the company he set up, Enlighten Ace, at 10am in Hong Kong.
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