NOBGF: Positive article in today's Barron's on trading/agribusiness companies Noble Group, Olam, and Wilmar International.
Article suggests growth in agribusiness will continue, and these companies participate not only by trading ag commodities, but more so also because they are moving aggressively into agricultural production themselves by buying land/farms/production operations.
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"NOBLE GROUP, WITH ITS HEADQUARTERS in Hong Kong, is Asia's biggest supplier of raw materials. Just 22% of its revenue comes from agriculture; the rest is derived from materials like iron ore. Noble has invested heavily in mines and processing. It's also in shipping and logistics and energy sales; it owns bulk carriers. And it recently purchased Sempra Energy Solutions, a North American electricity retailer that operates in 16 U.S. states. The seller was a joint venture owned by Sempra and Royal Bank of Scotland. SES is expected to account for 13% of Noble's 2011 earnings.
...For all of Noble's strength in hard assets, agriculture is a fast-growing focus for the company. Agriculture accounts for less than a quarter of its revenue but 38% of its gross profit. In 2009, China Investment, Beijing's sovereign wealth fund, took a 15% stake in Noble. The Chinese also plan to make joint investments with the company. Noble already processes oilseeds and owns palm plantations and other ag assets. Last month, it bought two sugar mills from Brazilian ethanol producer Grupo Cerradinho. Agriculture can be a high-margin business. HSBC reckons that an increase of just a 10th of a percentage point in agricultural margins boosts Noble's earnings 1.3%.
"...earnings have grown at a fast clip over the past few years, and are likely to spring more than 50% this year. Says Noble's Ricardo Leiman: "Noble is a growth story. We intend to get to $1 billion in earnings in 2013. We want to grow the top and bottom line 20%. We pay a 25% dividend every year."
"...Noble has long traded at a discount to Olam and ADM because of its exposure to cyclical commodities..."
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I continue to hold all my Noble shares. |
