Check this out. Noble is in the best financial situation in it's...

Check this out. Noble is in the best financial situation in it's history.

Surplus cash and looking to invest.

http://m.ft.com/cms/s/0/b8071ab0-6679-11e4-8bf6-00144feabdc0.html

Enjoy.


Noble Group reviews capital structure
Neil Hume, Commodities Editor
Noble Group, one of Asia’s biggest commodities trading companies, has launched a review of its financial structure that could pave the way for capital to be returned to shareholders.

Speaking after the release of third quarter figures, Noble chief executive Yusuf Alireza, pictured, said the company was looking for ways to deploy the $1.5bn of proceeds from the sale of a majority stake in its agricultural business to Cofco, the Chinese state-owned grain trader.

However, if Noble could not find suitable investment opportunities that it met its return criteria, Mr Alireza said the company would not keep excess cash on its balance sheet.

“We are reviewing all aspects of capital structure, which includes our leverage, how much equity we have, how much equity we need, our dividend policy all of those things,” he said. “We have the strongest balance sheet in our history.”

Analysts at Barclays said Noble’s net debt could decline from $5.4bn to $2bn by the end of the year once the entire proceeds of the Cofco deal – including a debt repayment of $1.9bn – are received.

“While debt reduction will strengthen its balance sheet, the company could practically be debt free excluding the liquid inventories,” said analyst Ephrem Ravi.

Noble has been reducing its direct exposure to upstream, or production, assets so that it can focus on trading and transportation of physical commodities – or what Mr Alireza has described as the company’s core competency.

To that end the Hong-Kong based group, which has a market value of just over $6bn, sold a 51 per cent stake in its asset heavy agricultural business earlier this year to a consortium headed by Cofco.

At the same time, it has been investing in private equity vehicles such as X2 Resources, the new mining venture of Mick Davis, the former head of Xstrata.

It has also helped finance EIG Global Energy Partners a vehicle aimed at snapping up assets in the energy sector.

The investments are aimed locking down stable sources of supply and demand in an increasingly competitive market place. This asset-light strategy also allows Noble to focus on trading and not on running mines, sugar mills or oilfields.

However, many analysts are sceptical private equity groups can make deals work, particularly in the mining sector where the big mining houses are not under any significant pressure to divest assets.

X2 Resources has yet to make an acquisition and Mr Alireza said Noble had not “passed on” the $500m it has pledged to invest with Mr Davis.

Mr Alireza comments came after Noble reported a large increase in third-quarter profits after booking a $246m gain on the Cofco deal.

In the three months to September, the Hong Kong-based company reported net profits after tax of $153.9m, up from $65.8m in the previous quarter, on flat revenues of $23.3bn. Noble also recorded $100m of impairment charges against mining assets.

The company will pay a special dividend of 3 cents a share and said it had moved 71.6m tonnes of commodities in the period, up from 54m tonnes a year ago.

Having weighed on earnings last year, Noble’s agricultural business saw record volumes in the third quarter and improved profit margins for crushing oilseeds.

Shares in Noble, which are listed in Singapore, closed at S$1.20 on Friday and have risen 11 per cent in the year to date, outperforming the industrial sector by 3.3 per cent.

China Investment Corporation, China’s biggest sovereign wealth fund, sold a third of its holding in Noble in September. Analysts expect the fund to dispose of its remaining 10 per cent. Asked if he would consider buying back the shares from CIC, Mr Alireza declined to comment.