Noble Group Ltd: Hits 6-year low
Noble Group (Noble) recently saw a sharp pullback in its share price to hit a six-year low of S$0.64; this as sentiment is likely weighed by the on-going uncertainty over its accounting practices as well as the weaker outlook for commodities in general. Although there was a spate of insider and institutional buying over the past two weeks, it did little to prop up the share price. And with the cautious outlook likely to persist, we now reduce our valuation peg on the stock from 13.5x to 8x (1 SD below the 10-year average) FY15F EPS, and this reduces our fair value from S$1.05 to S$0.61. We are retaining our HOLD rating as current valuations are not pricey on a historical basis as Noble now trades at just 0.7x book value. (Carey Wong)