As you all might already have known , Noble Group is a STI component that makes the STI index. It's a blue blue chip. Noble Group is the first blue chip that makes it into my holding portfolio.
Noble Group is a market leader in managing the global supply chain of agricutural, industrial and energy products. With a network of over 70 offices in 35 countries serving more than 3500 customers. Noble Group adds value at every link in the supply chain. With 2004 revenue of US$8.6 billion.
In 2005, Noble Group was assigned ratings from Moody's Investors Service and Standard & Poor's Ratings Agency and joined the benchmark Straits Times Index and MSCI Index in Singapore. During this period, the Group was also recognized by Hewitt Associates as one of Hong Kong’s Best Employers, The Asset for its excellence in Corporate Governance while topping the annual Forbes 2000 list of best stock performers over the past five years. In 2004, the Group’s Board of Directors was awarded the Listed Company (Main Board) Board Award from The Hong Kong Institute of Directors and ranked first on the Billion-dollar club of the Singapore Stock Exchange for Total Shareholder Returns over a 3 and 5 year period.
Let me show you my buy decision making for Noble Group.
On 8th September 2005,
Noble group subsidiary Noble Energy expanded into the Global Carbon Market. Lead by a experienced team.
On 1 January 2005, the EU established a new carbon market through the implementation of the EU ETS. The EU ETS resulted in approximately 7,300 companies being exposed to greenhouse gas emission compliance requirements. Through legislation enacted by the local governments of the 25 EU member states, the affected companies have imposed upon them tight carbon emission restrictions. The first compliance period under the EU ETS is 2005-07 which precedes the first Kyoto Protocol compliance period which starts in 2008. Under the EU ETS, many companies, and especially those in the power industry, received substantial under-allocations of emission allowances and will have to obtain credits from the market to meet their compliance requirements. Non-compliance with EU ETS requirements has significant adverse financial consequences as penalties for non-compliance in the first EU ETS compliance period are € 40 per tonne of excess emissions plus the requirement that the entity still obtain the necessary emission credits (currently market priced at approximately € 20 per tonne) to be compliant. The second emissions compliance phase in the EU runs from 2008-12 (parallel with the first Kyoto Protocol compliance period) and will bring even tighter emission allocations and higher penalties (€ 100 per tonne) for non-compliance.
The ratification of the Kyoto Protocol by Russia and its coming into effect on 16 February 2005 has created from 2008 onwards a worldwide emissions compliance market with many interesting opportunities. For example, countries such as Japan and Canada are expected to be “short” in
respect of emission rights and accordingly such market players will have to source additional credits from the world market.
The existing combination of Noble’s coal and raw material portfolio, its excellent global contacts and positioning in the fast growing Asian markets, in conjunction with the new carbon credit team’s skills and market access, will allow the Group to pursue many promising emission market opportunities in the future.
The new carbon activities of Noble will operate from its Dublin subsidiary, Noble Carbon Credits Ltd. and supported by two offices in Frankfurt and Amsterdam. Leveraging off its current businesses and industry contacts, Noble plans to quickly expand this business worldwide
and sees itself as the first player with a global sourcing, marketing and portfolio management approach to this new market.
The activities of the new carbon team will initially focus on the global sourcing of CERs from Kyoto’s “Clean Development Mechanism” projects in developing countries and the sourcing of EU Allowances. Subsequently, Noble plans to become directly involved, through investment and otherwise, with greenhouse gas abatement projects.
Noble Energy expands into India
Noble Group, has hired Mr Ajay Mishra to expand its Carbon business in India and the Asia Pacific Region. Mr Mishra was most recently with TATA International. Mr Mishra has broad experience in the full range of carbon products (Coking Coal, Coke, Anthracite and PCI). Mr Mishra will be joined by other experienced personnel in forming the new Kolkatta operation of Noble Energy. This team will allow Noble Energy to capture geographic and product group synergies with the formation of this new office.
"Ajay and the team will be key in expanding Noble Energy role within the carbon market in India. It is a very exciting time in the Indian steel market and to be supported by the most experience team in the market place allows us a solid base to expand business going forward. This team will also support Noble Group’s other strategic relationships in India” said Mr William Randall, Director, Noble Energy Inc.
Quoting an article from BusinessWeek.
In Asia, A Hot Market For Carbon; The Market For Carbon Credits Is Cutting Pollution
In Developing Countries
BusinessWeek
19 December 2005
by Frederik Balfour
On the outskirts of Bangkok, generators fueled by methane from swine manure make electricity. In China's Inner Mongolia, wind farms are sprouting up along the breezy steppes. In India's Andhra Pradesh state, villagers power their tractors with a cleaner-burning diesel substitute pressed from seeds of the mighty honge tree.
What do these far-flung projects have in common? They're all the direct result of the 1997 Kyoto Protocol, a sprawling global initiative
to reduce emissions of greenhouse gases linked to global warming. The U.S. and a handful of other nations spurned this treaty, in part because it exempted emerging nations from making their own cuts. But the innovative financial systems that Kyoto inspired have made it relatively easy for developing countries to hop on board.
Under the Kyoto treaty, developed countries are required to cut emissions by an average of 6% from 1990 levels by 2012. Each
country is permitted to emit a certain number of tons annually of carbon dioxide or its equivalent. Governments then issue emission "allowances'' to polluters within their borders, and these can be bought and sold by companies worldwide.
Through this carbon trading system, big polluters in developed countries can pay companies in developing nations to cut emissions in their stead. Since many factories in developing countries use dirty, inefficient processes, it's often cheaper to clean them up than to replace the more modern equipment used in wealthy nations.
The system is helping foster green investments in countries that are home to some of the world's biggest polluters. In August, a Japanese consortium led by engineering outfit JGC Corp. and Marubeni Corp. joined up with a chemical maker in China's Zhejiang Province to recover gases released in making refrigerants. The deal will result in a reduction of the equivalent of 40 million tons of
CO2 -- creating credits worth about $200 million.
Sumitomo Corp. and Rabo Bank of the Netherlands have a similar contract with Gujarat Fluorochemicals in India for 3 million tons of carbon credits. And Paris-based chemical maker Rhodia is cutting nitrous oxide emissions at its plants in South Korea and Brazil.
Rhodia will likely sell those credits, equivalent to as much as 13 million tons of CO2.
Worldwide, developing countries are promising sweeping action, from cleaning up concrete plants, to sowing new forests that absorb carbon dioxide, to harnessing methane from landfills to generate power. So far, 39 projects have been registered with the U.N., and hundreds more are in the pipeline. Ultimately, the scheme could net as much as $12.5 billion for developing countries by 2012, the World Bank says. "There is a lot of appetite for these credits," says Edu Hassing, a project specialist with the Asian Development Bank in Manila.
Since the Kyoto accord took effect on Feb. 16, the market for emission allowances has soared. Most of the action is on the Amsterdam-based European Climate Exchange, or ECX. In the exchange's first month, 1 million tons of CO2 credits were traded. Next year, it's expected to be 700 million tons -- roughly 2 million tons a day -- and volume is expected to grow to some 4.8 billion tons in 2008. "It's a large baby for its age,'' says Sara Stahl, an ECX economist. The baby is getting richer, too.
Since the beginning of the year, prices have more than doubled, to $26 per ton of carbon dioxide.
So far, credit purchases from developing countries are relatively rare, and more often than not they're funded by public institutions
rather than private companies. For example, several European governments have pledged to buy up to $1.1 billion worth of credits through the World Bank, which is acting as matchmaker for companies in the developing world that want help funding cleanup efforts.
Recent examples include wind turbines with capacity of 26 megawatts in a remote part of the Philippines and a project to capture and harness methane gas released from coal mining in China's Shanxi Province that will cut emissions by 4 million tons annually. But as 2012 approaches and companies in the West realize it's cheaper to buy credits than to clean up at home, purchases of credits from developing countries are expected to soar.
There's little doubt that India and China will be big sources of credits. Both are industrializing at a breakneck pace with little regard for the environmental consequences, so there's no shortage of areas where pollution can be reined in. India has already negotiated dozens of carbon credit sales in projects ranging from hydro stations to harnessing methane gas released by decomposing garbage.
China, on the other hand, has been a relative laggard, with just three such deals so far. But many others are in the works. "China has
a huge potential to become one of the largest markets'' for pollution credits, says Kishan Khoday, team leader for energy and the environment at the U.N. Development Program in Beijing.
Some projects are clear winners. Gases released from making refrigerants, for instance, have 11,700 times the global warming potential of carbon dioxide. So capturing even small amounts can add up to huge numbers of carbon credits. Methane, meanwhile, does 21 times the damage of pure carbon dioxide, and it's a fuel in its own right, so harnessing it can offer a big payoff. Such projects are rarely undertaken without carbon trading, but with it they can be highly profitable, offering returns of as much as 30% per year, says Zhao Jianping, an energy specialist at the World Bank.
Other potential projects, though, will be harder to pull off financially. For example, in China it costs about 6.2 cents to produce a
kilowatt-hour of electricity using wind power, compared with 3.7 cents for coal. Current prices for carbon credits translate into a subsidy of roughly 0.6 cents per kilowatt hour, though funding initiatives planned by Beijing may make wind power more attractive.
How valuable will carbon credits become? Currently, credits cost up to 70% less than allowances because if a project falls through
and the developing-country partner doesn't clean up its act, the company that bought the credits is held responsible. "We must do
a hell of a lot of due diligence,'' says Thorsten Ansorg, director of Noble Carbon Credits Ltd., a subsidiary of Hong Kong trading firm Noble Group that has bought millions of tons of credits from developing countries. "We have no desire to buy something that never materializes.'' But as the market gets more efficient at separating smart projects from wishful thinking -- and as companies in the West struggle to meet their Kyoto targets -- prices are likely to rise. "As the deadline gets near,'' says Andres Liebenthal, an environment specialist at the World Bank in Beijing, "there is going to be a scramble'' for credits.
Clean & Green
Carbon credits are helping developing countries clean up their industry
COUNTRY PROJECT VALUE CARBON
(MILLIONS CREDITS OF (MILLIONS DOLLARS) OF TONS)
China Generating power using methane recovered from coal mining $17 4
India Recovery of gases released in making refrigerants $15* 3
Indonesia Capture of pollutants from cement production $11 2*
Guatemala 43-megawatt hydro plant to replace coal facility $5 2
Philippines 25-megawatt wind farm to generate clean electricity
$2.4 0.6
* BusinessWeek estimate Data: World Bank
Nuclear energy
“Noble seems well-positioned to prosper from Chinese growth,” said BusinessWeek. “With Beijing planning to build 30-plus nuclear reactors by 2020 to meet the country’s energy needs, Elman wants to get into the business of importing, transporting, and processing uranium for China.” The magazine also took note of Noble’s plans to participate in the global market for carbon credits, which the company sees as an emerging lucrative business as a result of emission-control laws.
Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information.
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