Below is the summary of findings by Iceberg-Research
Summary of Findings:
Noble exploits the accounting treatment of its associates to avoid large impairments and fabricate profit.-
Yancoal is the most representative example, with a gap of $600m between the carrying and market values. However, the accounting technique has been used for other companies.-
Contrary to what Noble’s management claims, the misfortunes of these associates have a
substantial cash impact on Noble.-
The proclaimed recovery of the Agri business in 2014 was manufactured through the use ofquestionable methods such as subsidies from the group or depreciation cuts.-
We believe the final price for the new associate Agri will be much lower than the provisional $1.5b payment; and/or that Noble will have substantial remaining financial commitments to its new associate. Noble may once again use the accounting for associates to hide the impairment.-
Selling the palm oil business will be very difficult for Noble since the licence of one of its subsidiaries has been revoked by the local government.
Noble exploits the accounting treatment of its associates to avoid large impairments and fabricate profit.-
Yancoal is the most representative example, with a gap of $600m between the carrying and market values. However, the accounting technique has been used for other companies.-
Contrary to what Noble’s management claims, the misfortunes of these associates have a
substantial cash impact on Noble.-
The proclaimed recovery of the Agri business in 2014 was manufactured through the use ofquestionable methods such as subsidies from the group or depreciation cuts.-
We believe the final price for the new associate Agri will be much lower than the provisional $1.5b payment; and/or that Noble will have substantial remaining financial commitments to its new associate. Noble may once again use the accounting for associates to hide the impairment.-
Selling the palm oil business will be very difficult for Noble since the licence of one of its subsidiaries has been revoked by the local government.
Source: Iceberg-Research
The person behind Iceberg isn't someone normal but rather an account or an auditor. He or her understanding of financial statements have shown accounting background. Carey Wong, an analyst in OCBC investment research in Singapore believes that the person who wrote Iceberg has an accounts background with good understanding of financial statements. Without the report, it is not easy for retail investors to learn about such information. The person could probably be a former employee in Noble in order to understand such detailed accounts engineering.
Even with share price uncertainty, it is not easy to know the actual valuation and how low it could get unless we get some perspective from somewhere. I happened to chance upon Iceberg's third report which gave a hint of how low Noble's price can go."After impairments and using a price-to-book valuation method, we find a valuation of S$0.1 per share."
Attractive or not attractive?
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