4 reasons why Noble's big boss insists on being 'asset-light'

It has survived the worst year ever.

According to CIMB, “asset-light” is the new buzzword. Key topics discussed during Noble’s post-results luncheon were its asset-recycling initiatives, strategy, and growth outlook.

Having survived its worst year ever, Noble is looking forward to some normalisation in agriculture profits: this should be enough to drive the group’s FY13 profit growth.

Organic growth from the energy and metals segments could also help.

Here's more from CIMB:

Instead of taking full ownership of upstream assets, Noble will invest in minority stakes in exchange for off-take agreements. This is a slight strategic shift, but does not deviate much from Noble’s existing philosophy, since the group is not asset-heavy to begin with.

CEO Yusuf Alireza’s rationale for being asset-light:

1. Higher returns in the forms of ROE and ROA.
2. Noble aims to be commodity price-neutral; it does not aspire to take directional bets on commodity prices. Ownership of upstream assets puts it in a structurally long position.
3. Noble’s core competency lies in supply chain management. Expanding upstream distracts Noble from its core competency.
4. Owning assets puts Noble in potential conflict with its customers as it introduces competition between Noble and its customers , which include producers.