Here’s what analysts have to say about the accounting fraud claims versus Noble

Is the group’s damage control good enough?

Noble Group is currently navigating a maelstrom of adverse publicity after an anonymous research house released two damaging reports about the group’s “questionable” accounting practices.

Although Noble is not yet out of the woods, analysts remain fairly upbeat on the group’s prospects thanks to its strong underlying results and cash flow.

“Although we note that there is room for the company to improve its disclosures, these are non-cash items and don’t affect our DCF-based valuations. Doubts have also been raised over the lack of operating cash flows despite rising net income. We note that operating cash flows before working capital have broadly been consistent with its earnings trajectory. Moreover, cash outflows on working capital with rising volume and prices are consistent with the business model of most commodity traders globally, in our view,” wrote Barclays analyst Ephrem Ravi.

Noble has repeatedly rebutted the charges made by Iceberg Research, and other analysts believe that these attempts at damage control should be able to soothe the group’s rattled shareholders.

“We think Noble’s timely and comprehensive response to Iceberg’s allegations should assuage market concerns,” stated Wei Bin, an analyst at Maybank Kim Eng.

However, Nicholas Teo of CMC Markets noted that most shareholders are likely to wait and see before taking definitive action..

“It remains to be seen whether the initial, positive steps taken in Noble’s report yesterday will settle the market’s nerves over the recent volatility of the stock. Only the market, in its most efficient state, can determine the range that the stock will settle at. However before that stage is reached, most ‘natural’ buyers will adopt a wait-and-see attitude, at least until details of Iceberg’s third report on Noble is released,” he wrote.

Earlier this month, Standard & Poor's has stated that Noble’s recent troubles are unlikely to dent its credit ratings.

“We note that impairments are non-cash items and not included in ordinary earnings. Impairments would not directly affect Noble's credit metrics because we exclude non-cash items from our calculations of financial leverage and liquidity,” S&P stated.