noble group 15th nov 2013

Valuation Case Study on

Noble Group Ltd

Valuation Case Study on

Noble Group Ltd

Disclaimer and Declaration

The objective of the presentation is for educationalpurposes. The full content of the presentation is forillustration purposes only and should not be used as

investment recommendations. AB Maximus and itspresenters are not responsible for all investment activitiesconducted by the participants and cannot be held liablefor any investment loss.

The company and presenters may have personal interestin the particular shares presented.

Agenda

Company Background1

Industry Overview2

Research Report Comparison3

Risk4

Company Background

Noble Group Ltd manages a global portfolio of Supply Chains covering Agriculture, Energy, Minerals and Ores, originating

product from low cost producingcountries and delivering to high growth

demand markets

Company Background

Source: Companys Presentation Slides

Business Model Analysis



Noble Group

Production

Processing

Logistics/

Shipping

Delivery

Biggest risk for Noble would be Decreasing commodities price

And rise in interest rate


Source: Citi Research

Steel consumption likely to normalize in coming years


Source: Citi Research

Global Mining Capex is expected to slow down

Company Financials

Source: Companys 3Q results

Due to US$79 Million loss From Yan Coal Australia

Company Financials

Source: Companys 3Q results

4197, 17%

17470, 68%

3928, 15%

Agriculture

Energy

MMO

Industry Overview


Company Financials

Source: JP Morgan Research

Company Financials

Ratio Analysis FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

Growth rate (%YoY)

Revenue 53.59% -13.60% 81.82% 42.39% 16.49%

EBIT 120.30% -8.26% 16.57% 20.33% -10.73%

Net proft 123.65% -3.68% 8.91% -28.77% 9.26%

Profitability

Gross Profit Margin 3.51% 3.73% 3.54% 2.88% 1.83% 1.60%

Net Profit Margin 1.10% 1.60% 1.78% 1.07% 0.53% 0.50%

Return on Asset 7.77% 5.91% 4.33% 2.31% 2.38%

Return on Equity 11.54% 8.17% 5.68% 3.52% 3.79%

Liquidity

Current Ratio 1.63 1.58 1.87 1.54 1.74 1.42

Quick Ratio 0.87 0.93 0.63 0.72 1.01 0.97

Cash Ratio 0.21 0.32 0.14 0.11 0.14 0.06

Solvency

Debt to Equity 0.38 0.31 0.33 0.35 0.31 0.29

Interest Coverage -86.02 NA NA NA 2.37 2.28

Solvency 0.10 0.23 0.16 0.10 0.07 0.08

Efficiency

Asset Turnover 3.50 4.43 2.93 3.27 4.05 4.77

Payable Days 39.38 36.85 29.52 24.29 17.72 18.72

Account Receivables Days 34.75 25.31 26.38 31.60 34.80 34.67

Inventories Days 28.97 18.46 41.44 26.30 13.13 13.42

Cash Conversion Cycle 24.34 6.92 38.30 33.61 30.21 29.36

Very tight gross profit margin

Have to depend onCredit facilities

Company Financials

Research Reports Comparison

Methodology

Compared the various research reports from different broker houses


Source: CIMB, May Bank, JP Morgan,OCBC


Source: CIMB


Source: May Bank


Source: JP Morgan


Source: OCBC


Source: CIMB

Low Valuations for both PE and P/B



Low Valuations for both PE and P/B



Noble has lowest operating margins as compared to its global industry peers (EBITDA margin of Glencore: 2.1%, Archer-Daniels-Midland: 2.8%, Bunge: 2.6%, WimarInternational: 4.9%, and Olam:5.3%)..

Tapering would have impact on Noble operations due to increase in interest rate

Remain Neutral on this counter

Trading Data

52 Weeks Trading Range $0.79-$1.27

Avg Volume (3 mths) 28 mil

Market Cap 6.93 bil

Main Risks

Agriculture business more vulnerable to changes in weather conditions, harvest seasons, natural calamities, and agricultural pests and diseases.

Sharp decrease in raw material prices which cannot be effectively hedged

Foreign Currency risk

Main Risks

Noble has thin operating margins and have declined considerably over the last three years this could increase its business risk.

Default Risk Medium to High

Current ratio = 1.42 x

Interest coverage = 2.38 x

D/E ratio = 0.29

Loans maturing this year = $2 bil

Cash = $604 mil in cash and S/T investments

noble group 15th nov 2013

Documents

na na na

noble group ltddisclaimer

cash ratio

net profit margin

downcompany financialssource

investment loss

payable days

inventories days