http://www.wsj.com/articles/noble-gets-few-prizes-for-transparency-1425643834
Noble’s Iceberg Rebuttal Gets Few Prizes for Transparency
ABHEEK BHATTACHARYA
March 6, 2015 7:10 a.m. ET
One of Asia’s largest commodities-trading houses is trying to convince investors that its accounting is transparent. The whole exchange offers a reminder, though, that the very business of trading commodities is opaque. Singapore-listed Noble Group late Thursday issued a rebuttal of claims by Iceberg Research, a little-known entity that has published two reports since mid-February questioning Noble’s accounting. It is impressive that Noble responded just a week after Iceberg’s second report, perhaps one reason its shares rose 5% Friday.
Yet the stock still is down some 12% since Iceberg’s first report came out. Speed aside, Noble’s response left some questions unanswered.
Iceberg’s first allegation was that Noble carried the stake it held in Australia-listed coal miner Yancoal at $678 million on its books at the end of 2013, when the market value was a fraction of that. Noble partly addressed this issue by writing down the asset to $322 million last week. That write-down seems too little, though, considering the market value currently stands at only $8 million. Noble classifies the miner as an “associate” despite holding a stake of just 13%, and values it through its own projections of what Yancoal’s cash flows will be. Noble suggests the market price of Yancoal matters less, since it is a thinly traded stock. Even so, at least investors can plainly see that price in contrast to Noble’s in-house projections. Continue reading →
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