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Noble Group’s Cliffhanger

Submitted by Noble Group Research

Noble Group’s Cliffhanger

2010:  Harry Banga split… most of Noble problems start here.1

2015:  Noble Group, one of the biggest traders of commodities from coal to iron ore is melting from its base.

Script writers have devised the solution of telling us a story but leaving it at a cliffhanger, thus forcing the market to postpone their execution to hear the rest of the tale.

A villain was designed and a lawsuit with an injunction was filed with the Hong Kong High Court asking to ban his research, hoping to ensure the audience will return to see how the characters would resolve the dilemma.

Behind the scenes, the legally aggressive stance of Noble Group Ltd is rapidly becoming known in the financial analysts’ community as analysts and media organizations are threatened one after another by the troubled SGX-listed trader.

The censorship and its lawyers used to claim full control of the situation with the hope that its critics and the market would be “reset”—akin to being lobotomized.

The company has left us with its cliffhanger: even the most egregious comments made by Iceberg on the trader happened to be entirely correct.

“The Hong Kong High Court has recently ordered that Noble pays a substantial amount of money to Iceberg after an unreasonable application made by Noble was once again rejected by the Court”.

The futility of Noble’s claims has been remarkable.

“For example, Noble has defended that Yancoal was not overstated (although it was valued 48 times its market value)  and that saying otherwise would be defamation.” 2

It has not paid off.

Plainly, it’s Iceberg who was right.

Noble Group, the SGX listed trader is insolvent based on liquidation value (a write-off of its commodity contracts or the asset value).

Noble recorded $465m negative OCF in full year 2015, stressing it generates positive cash flow in the second part of the year ($580m after interest) but has never given any detail on how the short hedges supporting this cash generation in Q3 and Q4…

Noble has never turned the page on 2015…

Its Management has a ludicrous coal forward projectio , pricing 60 to 70% above the current curve (and with a deteriorating coal market outlook).

Neither, Noble Group or its public relation firms have enjoyed huge credence or the control of the script lately, and one can fully expect them to be irrational until they either blow up or magically emerge unscathed…

We are prognosticating the likelihood of the former.

Using the same adjusted financials used by financial institutions and rating agencies, we can see who is without trunks as the sea ebbs. The time clock is running.

We are now entering May, with things becoming more loose: why is Noble so late in securing financing?

1. “Back with a Banga”, South China Morning Post


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