Noble Group's share slump worsens as DBS sees further losses

SINGAPORE (May 12): Noble Group Ltd.’s losses could continue as the commodity trader may be unable to hedge price risks in its coal business effectively, according to DBS Group Holdings, which cut its share price target by about 60%. The stock extended its collapse to a 15-year low as its bonds plunged.

A change in the structure of the coal market, a flattening of the forward oil curve and higher borrowing costs could delay the company’s return to profitability, analyst Mervin Song wrote in a report Friday. The bank slashed its target to $0.94 from $2.30, while maintaining a hold rating.

The trader said Thursday it will take at least a year to return to profit after posting its worst quarterly loss since 2015, and blamed the result on wrong-way bets on coal because of price distortions caused by hedge funds. It’s the latest in a string of setbacks for Noble, once the largest commodity trader in Asia, which has been selling assets and cutting costs to bolster its finances after years marked by credit-rating downgrades and a share-price collapse.

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