Noble Advances in Singapore, Forecasts Record Profit

By Luzi Ann Javier and Jean Chua

Oct. 28 (Bloomberg) -- Noble Group Ltd. , the second-worst performer in Singapore's benchmark index over the past month, surged after the commodity supplier forecast record profit for the three months to September and said cash balances were increasing.

Noble, which more than doubled second-quarter profit, advanced 27 percent, to 59.5 Singapore cents, the biggest gain since April 1999. The Straits Times Index added 4.1 percent.

The credit crunch has stoked concern banks may choke off lending to commodity buyers, gumming up trade flows. Noble's stock lost 59 percent of its value over the past month as commodity prices fell on concern a global recession will undermine demand.

``Fears over the outlook for commodity demand have been overplayed and Noble's steep year-to-date decline is unwarranted,'' Lee Wen Ching, an analyst at OCBC Investment Research Pte, wrote in a note. The company's update quelled ``fears over its outlook in light of declining commodity prices.''

The Hong Kong-based company has more than $6 billion in credit lines that ``remain in place,'' the company said in the update on business conditions. Cash rose ``significantly'' to more than $1.1 billion at the end of the third quarter in part as lower commodity prices cut the need for working capital, it said.

`Record Earnings'

``Noble is on track to achieve a year of record earnings and could well surpass our $455.4 million net profit target,'' OCBC's Lee wrote. OCBC maintained its ``buy'' rating on the stock and a fair-value estimate of S$2.53.

Noble Chief Executive Officer Richard Elman said in an interview in September that earnings may rise to a record this year as grains, coal and metal shipments grow. The company, scheduled to announced third-quarter results on Nov. 10, reported profit of $290 million in the first six months of the year.

The board ``plans to maintain the dividend at a level at least commensurate with last year,'' the statement said. Noble paid a full-year dividend of 2.48 U.S. cents last year, according to Bloomberg data.

The Reuters/Jefferies CRB Index, which tracks 19 commodities, has fallen 28 percent this year. Noble has lost 71 percent of its market value in 2008 compared with the 62 percent drop in the MSCI AC Asia Pacific Materials Index.

To contact the reporters for this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Jean Chua in Singapore at jchua4@bloomberg.net