Iceberg spurns PwC assurance review, hits out at Noble's cash outflows

The short seller is sticking to its guns.

Iceberg Research has unleashed a scathing criticism of PwC's assurance review on Noble Group's contested accounting framework a day after the commodities trading giant released its second-quarter results.

Similar to its statement two months ago, Iceberg reiterated that the results of the review were "expected" and did not challenge the "realism" of Noble's mark-to-market assumptions.

"The PwC review fails to address the market’s concerns. Investors want to know the real value of these MTM, not whether Noble successfully exploits accounting loopholes," said Iceberg.

Iceberg also lashed out at Noble's cash outflows, noting that the company has used US$386m in one quarter and more than one billion in six months.

Iceberg also took issue with Noble's rising debt and its allegedly inflated valuation of Yancoal.

"Most questions during the conf call revolved around Noble’s operating cash outflows, not the anaemic profitability. Some factors can affect one particular quarter. For example, the development of some businesses can have a negative impact on cash flows because they require additional working capital. But this effect will be seen over a limited period of time. Poor cash flow generation has been a structural and long term issue for Noble. A more fundamental reason behind this poor performance is that Noble has struggled to realise its MTM," said Iceberg.

Noble was down 12.3% as of 1:02 PM and were trading at 0.50 Singapore cents per share. It was the most heavily traded stock on the SGX, with over 125 million shares changing hands.

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