Noble Group chalks up big gains as it changes tack

Noble Group posted its biggest one-day gain on SGX since Aug 27, with about 245 million shares changing hands.
Noble Group posted its biggest one-day gain on SGX since Aug 27, with about 245 million shares changing hands.PHOTO: BLOOMBERG

News of commodity slump bottoming out may also have led to 16% price rise: Analysts

Noble Group share price rose more than 16 per cent yesterday, after it signalled that it was changing its business focus.

The share price was also boosted by a wave of optimism that the commodity slump could be reaching the bottom, said analysts.

The counter closed 6.5 cents up at 47 cents, its biggest one-day gain since Aug 27.

About 245 million shares changed hands - 339 per cent more than the three-month average, according to Bloomberg.

Analysts told The Straits Times that the firm could be altering its business strategy in line with its promise to deliver immediate results, a move that likely boosted investor confidence.

ON THE WAY UP

The company seems to be changing its focus. It's trimming some of the businesses it feels will not do well in the next few years, such as copper. Adding to that, investors are looking for laggards in the (commodities) market now that it's going up, and this company is definitely one.''

MR CAREY WONG, analyst at OCBC Investment Research

"The company seems to be changing its focus," noted Mr Carey Wong, analyst at OCBC Investment Research.

"It's trimming some of the businesses it feels will not do well in the next few years, such as copper.

"Adding to that, investors are looking for laggards in the (commodities) market now that it's going up, and this company is definitely one," he said, noting that Noble has been "sold down very aggressively" since Iceberg Research attacked its accounting policies in February.

The commodity trader, which has lost a number of senior trading staff recently, said on Thursday it has hired Mr Frank Russo as its new head of internal audit.

Mr Russo was formerly GE Capital's managing director and head of audit for energy, aviation and insurance businesses.

Earlier this week, the group hired Mr Wael Amer, who previously helmed the oil trading business for Middle East and East Africa at commodities giant Trafigura. He will be Noble's new deputy head of Middle East and North and East Africa.

The blue chip is still more than 60 per cent below its high this year of $1.205. It is also the worst performer on the Straits Times Index.

Mr Wong, who maintains a "hold" call on the stock with a target price of 60 cents, added that traders were likely also encouraged by news that commodity prices could have bottomed out.

Pacific Investment Management Co, which manages US$15 billion (S$21 billion) in commodity assets, said yesterday that the worst of the price collapse is probably over, with oil poised to gain over the next 12 months. But it added that the rebound will not be major as prices are set to remain "lower for longer" because of excess inventories.

Local commodity stocks have staged gradual recoveries from record lows over the past weeks.

Palm planter Golden Agri-Resources, which rose 1.5 cents, or 4.3 per cent, to 36.5 cents yesterday, is up by about 18 per cent for the month, while agri-business Wilmar International added seven cents, or 2.5 per cent, to $2.89, marking a monthly gain of about 8 per cent.

Remisier Desmond Leong said that Noble's rally could continue for the next few days, given that its rebound "came in quite late compared with the others".

"But I don't really expect it to shoot through the roof," he added. "There are still short-sellers out there and internal issues they'll have to sort out first."

A version of this article appeared in the print edition of The Straits Times on October 10, 2015, with the headline 'Noble Group chalks up big gains as it changes tack'. Print Edition | Subscribe