Tue, May 16, 2017 - Page 10 News List

Noble’s shares hit leads to concerns about future


Shares in troubled commodities trader Noble Group Ltd (來寶集團) yesterday plunged again after taking a massive hit last week, sparking concerns over the company’s viability.

The firm sank 14 percent to a 15-year low of S$0.57 at one point before paring the losses, and ended the day down 11 percent at S$0.59.

The stock plunged 48 percent last week, along with a sharp decline in the company’s bonds.

“Many people have asked whether the fall is going to last, or is it still a viable entity going forward,” KGI Securities trading strategist Nicholas Teo (趙長順) said.

He said creditors need to assess whether the firm is “still an entity that one should be dealing with as a counterparty either for trading, for borrowing, for just doing business with.”

In the latest in a series of setbacks, Hong Kong-based Noble reported a loss of almost US$130 million in the first quarter and said it would not return to profitability until at least next year to 2019.

Its stock was hammered in 2015 by a fall in commodities prices and it also suffered a credit rating downgrade. It had also faced allegations of irregular accounting practices.

The company has been selling assets and cutting costs to boost its finances and S&P Global Ratings said last week that the firm’s debt burden is unsustainable given its current earnings trajectory.

“Access to both short-term and long-term debt financing are key for any commodity-trading business model,” Macquarie Group Ltd analyst Conrad Werner said. “And while Noble’s liquidity headroom did tick up slightly in the first quarter, it remains low in both a historical context and relative to short-term debt, acting as a quasi-straitjacket for Noble’s ability to pursue volume growth.”

CMC Markets Singapore market analyst Margaret Yang Yan (楊燕) last week said that “technically, Noble’s share price looks like a ‘falling knife.’”

Additional reporting by Bloomberg

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