Analysts react to Noble's US$1.2b impairment

ICEBERG Research, the little-known group that raised questions on Noble Group's accounting practices a year ago, said the commodity trader faces a bigger problem than its US$1.2 billion impairment announced on Tuesday morning.

But a DBS report said the impairment had been expected.

"It is likely that Noble's critics will use this impairment as evidence that their analysis on Noble was correct and that Noble has been overstating the value of its assets. However, in our view most of the damage has already been done, as the market has effectively assumed zero value for Noble's level 3 assets ... the current stock price is below our valuation of S$0.42 which already assumes zero value for these items," DBS said. Level 3 assets refer to assets where their values cannot be determined using observable measures.

Iceberg had previously said that at least US$3.8 billion in fair values were overstated.

It said it will issue its fourth report on Noble Group before its financial results are announced on Thursday.

"Although pretty much all our arguments have now been recognised as facts (Yancoal, Agri, fair values), remarkably, there is still a legal action between Noble and Iceberg."

Noble Group shares traded down a cent to S$0.36 at 10.53am.

haoxiang@sph.com.sg

This article was first published on February 23, 2016.
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