In Accounting, China, Commodities, Corporate governance on 14/05/2015 at 1:31 pm
Many of Noble’s operations and investments are exposed to the slowdown in China.
And the Chinese economy is still slowing. And the engine of growth is no longer exports or infrastructure spending or construction. It’s the service sector.
Maybe when I hear that Noble is starting to shipping Pinoy gals to China as wives for barren branches, will I buy the stock.
In Commodities on 06/05/2015 at 1:23 pm
Noble said it had secured US$2.25bn of commitments for a new credit facility.
It retains the confidence of its lenders, giving them enough info to keep them lending. The problem for investors is that we small investors will be the last to know when banks cut credit lines.
In Accounting, Political governance on 20/03/2015 at 12:12 pm
“We unfortunately live in world where knowing that you run your business professionally is not enough,” the CEO of Noble wrote in a letter to stakeholders in February. “You must be able to prove it.”
But will he walk the talk? Two big funds* think so and have been buying. Maybe they have been assured on the following?
[A] chunk of the profits Noble reports comes from non-cash gains created by “marking to market” long-term contracts (eg, to supply coal) and derivatives it holds. Iceberg is not accusing Noble of fraud, but it is questioning how realistic these valuations are and asking how much of the company’s reported profits are the result of this practice. Noble reported that at the end of 2014 the net fair value of these positions was $4.6 billion, equivalent to 91% of its book value.
It is hard to tell from what Noble discloses in its accounts whether its valuations are indeed fair; and since it is also unclear how much of its profits come from such changes in valuation, it is difficult to assess how robust its profits are. Noble did not respond to requests from The Economist for comment. The firm’s cashflow has been weak. Over the past three years it has booked net profits of almost $1 billion but negative cashflow of almost $2 billion, after working-capital, capital-investment and interest costs.
On March 5th it issued an 11-page rebuttal, suggesting that a disgruntled ex-employee was behind Iceberg. It also gave more detail about the “fair value” positions. They reflect over 12,000 individual contracts, almost half of which mature within two years. Over the past three years the firm has realised $800m of cash from such positions. Yet the rebuttal omitted a vital piece of information: how much profit has been booked from these positions. Without this nugget it is hard to form a sensible judgment about Noble’s books or health.
*A unit of insurer Prudential, and Invesco increased their stakes in the company. [Added at 1.40pm]
In China, Commodities on 11/01/2013 at 5:39 am
But if China doesn’t perform, you’re in trouble.
S’pore Biz Review
It was annced yesterday that China’s commodities imports accelerated in 2012 in volume terms in spite of slowing growth in the overall economy, with crude oil, iron ore and copper reporting record high imports for 2012.
In Commodities, Corporate governance, Logistics on 11/11/2011 at 5:56 am
Commodities supply chain manager Noble Group (based in HK but listed here) announced on Wednesday the resignation of its chief executive only hours after reporting a surprise US$17.5-million (S$22.5-million) net loss in the third quarter from a net profit a year earlier. It blamed volatile market conditions and mark-to-market losses.
CEO Ricardo Leiman will remain as an adviser to the group after resigning “for personal reasons”, Noble said.
Chairman Richard Elman was appointed acting CEO, “We are taking this opportunity … to realign our goals and strategies to adapt to the many challenges that exist in the prevailing market conditions … It goes without saying that we are very unhappy with this performance even if it does just cover a very short period … things happen’ which are out of our control … remains very healthy and strong”.