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Chain Reaction Research: Noble Group: Cost of Capital and Deforestation Risks under priced?

Key Findings:

  • Forecast of 2016 revenue is $46 billion, 30% below 2015, due to poor semiannual
    performance and asset sell down strategy which may shave 4.5% off
    expected 2016 operating earnings, 18% annualized.
  • Impairments of palm oil assets and coal receivables may reduce balance sheet
    equity value by $400 million, or 12%. 33% of Noble’s palm oil landbank is
    undevelopable as it is primary forest and possibly peat. Coal assets are said to
    be overvalued by 30%.
  • Syndicate banks have been involved in the recent rights issue and are also
    involved in the divestment of North America Energy Solutions (NAES),
    suggesting a conflict of interest coupled with possible mispricing of debt and
    future increase in borrowing costs.
  • Net profit outlook for 2016 and beyond is below consensus due to divestments and expectations for higher interest rate. Risks for shareholders remain.

Click here to download the report (revised).

The Chain Reaction Research is a consortium effort of Aidenvironment, Climate Advisers and Profundo.

For more information, please contact Annemieke Beekmans or Priscillia Moulin.

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