Shares of Noble Group tumble in an apparent short attack

SINGAPORE - Singapore-listed Noble Group saw its share price plummet by over 8 per cent since the market opened this morning, as investors reacted to a report claiming that the firm is using an accounting loophole.

Shares of Noble, which manages industrial and energy product supply chains, dropped by 8.3 per cent to $1.105 at around noon.

This came after a report by Iceberg dated Feb 15 claimed that the group exploits the accounting treatment of its associates to avoid large impairments and fabricate profit.

"We estimate Noble's equity is less than $360 million - from a reported $5.6 billion - after the various impairments we list (in Iceberg's report). On a price-to-book basis, the value of Noble's shares is conservatively valued at a mere 10 Singapore cents, a 92 per cent fall from the current share price," Iceberg said.

Commenting on Noble's fall today, CMC Markets analyst Nicholas Teo said that the situation resembles what hit Olam when Muddy Waters launched a short-selling attack on the agricultural commodity firm in November 2012.

In its report then, Muddy Waters similarly claimed that Olam had an overly high leverage and was using accounting loopholes to beef up earnings.

Olam's shares were hurt by the report. A cash offer by Temasek Holdings in March 2014 subsequently stabilised its share price.

"While numbers quoted by Iceberg remain unverified, traders nonetheless are having a field day, jumping all over this sensational report with the new target price of Noble set by Iceberg at 10 cents," Mr Teo said.