SINGAPORE: Singapore commodity firm Noble Group saw its shares and bonds fall sharply for a second straight day on Tuesday, hit by a report from a little known research firm that questioned its accounting practices as well as a ratings review by a local brokerage.
The commodity trading firm has rejected claims from Iceberg Research which said in a note posted on the Internet on Sunday that Noble used aggressive accounting to mislead investors.
“The Company completely rejects the allegations. All material information to which Iceberg Research refers is in the public domain. There has been no material adverse change since the Company last reported,” Noble said in a statement on Monday.
Not much is known about Iceberg Research, which declined to comment on its background, analysts or its methodology. It said, however, that it did not have a short position on the company.
Since Friday’s close, Noble’s shares have plunged some 14 percent with further damage inflicted by a separate note from OCBC Investment Research on Monday which said the company’s buy rating and S$1.30 fair value price were under review.
It is the second Singapore-listed commodities trading firm to have its accounting practices challenged by a small research firm. Olam International, one of the world’s leading traders in rice, coffee and cocoa, was hit by a negative report from Muddy Waters in late 2012.
Carey Wong, an analyst at OCBC Investment Research, said in its note that although Noble has issued a statement to refute these allegations, near-term uncertainty was likely to linger.
He said Noble may need to be more proactive in meeting with investors to categorically counter the allegations, but noted that the company may be in a “blackout” period as it is due to report annual financial results on Feb. 26.
Macquarie Research said the two principal concerns highlighted by Iceberg were valid but not new – a potential write down of its investment in Yancoal Australia Ltd and a possible adjustment to cash proceeds from a stake sale in its agriculture business to a consortium led by China’s COFCO.
“Moreover, we find that Iceberg’s conclusions are biased to the sensational, it omits any investment positives, and we wonder if all of its analytical inputs are valid,” Macquarie analyst Conrad Werner said in a note that reiterated its outperform rating on Noble shares.
Noble bonds due 2020 have fallen about 8 points from last week to around 101 cents on the dollar.