Noble (CGP.SI)

Investment Opportunity?

Brand value? Tarnished.

Use of new technology to disrupt? Not obvious and not declared in the strategy.

Sympathy/spillover effect on valuation? If anything commodity companies are out of fashion. Gives potential unlocked value.

Trading Opportunity?

Potential sector or index selling? No way to monitor this yet.

Under/over-reaction to news?

  • CEO stated might never return to profitability or positive cash flow
  • Potential default on senior debt of $2b, bond holders hedging with stock
  • Potential short squeeze on debt holders at low P/B ratios
  • Short squeeze timeframe: 1w to 1m

Revenue

  • 90% from energy, 10% hard commods ($1.50 per share in hard commod revenue)

Energynobl energy revenue

Metalsnobl metals revenue.PNG

Business Strategy

nobl strategy.PNG

Valuation

  • Net assets after liquidation of roughly $0
  • Burning $0.50 in earnings every 6 months
  • If they sell oil business and are left with 6b of revenue, 5% profit margin, 5x EV/EBIT, net cash/debt of 0, equates to market cap of 1.5b USD or US$1.15 per share, S$1.57

Watching

  • Results after selling oil businesses

 

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