Selling the oil trading business should net Noble over half a billion dollars © Bloomberg
A good reputation is worth more than money, wrote Roman playwright Publilius Syrus. A former slave, his value grew as his renown spread. Noble Group, the Singapore-listed commodity trader, has suffered the opposite fate, punished for its lack of creditworthiness. Its market value has collapsed 95 per cent since June 2014. Monday’s report of the impending sale of its oil trading business to privately held Vitol underscores how much the paths of these two traders have diverged.
Noble’s oil trading business should make a good fit for Vitol. While the former bought into its Americas-focused unit in 2013, the latter has traded oil since 1966.
Questions about Noble’s true worth have forced it to divest and seek money from Chinese investors. Selling oil trading should net Noble over half a billion dollars. It could use the equity. Noble’s price to book value is just 0.2 times, putting its value at just over $300m. Other listed commodity specialists with trading units — such as Wilmar, Archer Daniels and Glencore — trade at or above book value.
Reports concerning a sale did nothing for Noble’s shares, though. They fell a tenth. Meanwhile, Vitol will gain more market share in its specialist area. Its oil trading volumes have surged by more than half since the financial crisis. Based on Vitol’s latest published accounts, its shareholder’s equity is over $10bn.
Underpinned by that, Vitol could be worth $10bn-$15bn. Crank up the returns with some leverage and the number rises. Given it often operates in frontier economies, it too bears reputational risks. But as a private company, Vitol is less exposed to prying eyes
It is unlikely Vitol has done better than Noble simply because disclosure requirements are lighter. Stronger governance should have been an advantage for Noble. But with neither its numbers nor its command structure up to scratch, Noble has been left enslaved by the very markets it hoped to impress.
Do you want to receive Lex in your inbox? Sign up for the weekly Best of Lex email at ft.com/newsletters.
http://ift.tt/2iunoIQ
Tidak ada komentar:
Posting Komentar