Noble is down 6.9% at $1.09 after Lexdale International, controlled by Vice Chairman Emeritus Harindarpal Singh Banga, placed 225 million shares.
“The news of the share placement is possibly hurting near-term sentiment because it comes quite soon after Noble reported disappointing profit,” says CIMB analyst Lee Wen Ching. But she adds “his decision to place out shares could be a personal decision. It could be due to factors such as retirement planning.”
She notes he also sold shares in February when profits were still rising, adding Noble’s anchor shareholders tend to take a long-term view; “their decisions should not be an indicator of near-term profitability.”
She tips two key points on whether Noble’s negatives are priced in: First, as a placement of vendor shares, it doesn’t result in dilution to EPS; secondly, when Noble reported a shock quarterly loss last year, the stock fell to a low of $1.05.
She says “its earnings disappointed, but it’s still profitable. So logically, the shares should not have as sharp a reaction as last year. I would expect it to find support at $1.05,” which is 1.1x its book value.
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