Hyflux

[iam802]

Matthews International Capital Mangement, LLC
- reduce stake from 5.30 % to 4.89 %

http://info.sgx.com/webcorannc.nsf/ef3b ... enDocument

[winston]

From Kim Eng:-

Hyflux Ltd, building the world's largest membrane- based desalination plant, may post record profits this year and next as governments step up infrastructure spending to bolster economic growth, an executive said. 'With the order book that we have of more than $1 billion, we have the confidence to say that 2008 will be a record year, and 2009 can be better,' deputy chief executive officer Sam Ong said yesterday.

The water-treatment company, which gets half of its sales from China, is counting on increased state spending in the world's fourth-largest economy to sustain profit growth amid the global recession. It is now in talks with two Chinese municipal governments for new orders, Mr Ong said. 'There's a long-term, bullish story' on China projects, said DBS Vickers Securities analyst Suvro Sarkar, who has a 'buy' rating on Hyflux.

Profit will 'be better next year because they're pretty much covered by existing orders.' The stock, which has slumped 48 per cent this year, declined 1.8 per cent to close at $1.65 yesterday, paring an earlier loss of as much as 4.2 per cent. That valued the company at $867 million. 'We don't like to announce agreements until everything has been finalised and funding has been secured,' Mr Ong said, referring to potential orders. About 90 per cent of Hyflux's revenue is generated from government contracts, he added.

Hyflux's profit more than tripled to $45.6 million in the nine months to Sept 30 compared with $13.3 million in the same period a year earlier. Mr Ong forecast on Oct 9 that orders in 2009 may expand as much as 30 per cent as governments boost spending to alleviate the impact of the credit crunch. The Chinese government said last month it plans to spend 4 trillion yuan (S$869 billion) through 2010 to protect the economy and create jobs. The stimulus package could contribute 1 to 2 per centage points to China's growth, Fan Jianping, chief economist at China's State Information Centre, said on Nov 30.

[millionairemind]

Singapore
December 17, 2008, 5.49 pm (Singapore time)

Hyflux breaks ground for world's biggest reverse osmosis desalination plant
By KALPANA RASHIWALA

Hyflux Limited announced on Tuesday the groundbreaking of the world's biggest reverse osmosis desalination plant in Western Algeria. The ceremony was presided over by Algerian President Abdelaziz Bouteflika.

The plant has a capacity of 500,000 cubic metres per day and is located in Magtaa, Oran.

'The heart of the project, namely the filtration process, will utilise Hyflux's award-winning proprietary Kristal ultrafiltration membranes, making it the world's single largest ultrafiltration desalination plant,' Hyflux said in a statement to the Singapore Exchange on Wednesday.

'Construction of the plant will now commence and is scheduled to be completed in 28 months' time upon achieving financial close.

'In addition, the project company, Tahlyat Myah Magtaa SpA, has executed the financing agreement with the Banque Nationale Algeria and is now in the process of satisfying various conditions precedent under the financing agreement. The project company expects to achieve financial close by 1st quarter 2009,' Hyflux added.

[kennynah]

And still, it's sub S$10/share. Maybe they need to obtain the technology to condense hot n moist flatulence to drinkable water before their share price ever will see daylight

[winston]

Not vested.

DBS Research believes current risk-reward ratio for Hyflux looks attractive, given:-
1) excellent near term earnings visibility backed by S$1b of order backlog;
2) potential catalyst of new order wins driven by China’s recent RMB4 trillion stimulus package and
3) continued emphasis on environmental protection globally.

Maintain BUY with a revised TP of S$2.13.

[winston]

From DBS:-

Well-positioned for growth

Post-conference, we remain optimistic about Hyflux. It has secured funding to support existing and potential new contracts. And despite the economic uncertainty, management expects its net orderbook to grow 20% annually. Hyflux’s profit will continue to grow in the near
term, underpinned by its S$1.3b orderbook that is relatively secured since most of its contracts are backed by government bodies.

Maintain Buy and S$2.13 target price.

No funding problem. About 70% of Hyflux’s orderbook (c. S$900m) relates to Algerian projects that have secured project financing at attractive terms, while the remaining S$400m can be comfortably funded by divestment proceeds ( S$88m), surplus cash from Algeria, and S$300m of unused MTM. Leveraging on its past successes in innovative capital-recycling platforms, Cityspring and Hyflux Water Trust, management will continue to devise appropriate funding mechanisms to ensure adequate capital for long-term business growth.

Continuous contract flow. Although more time is now needed to filter for bankable projects, Hyflux is determined to grow its net orderbook by 20%. The strongest growth potential is in Algeria, which needs 40 desalination plants over the next five years. In light of the credit crunch, Hyflux prefers to secure EPC deals instead of capital intensive BOT. Brownfield or TOT projects that are already generating
cashflows also fit into the tight lending environment.

Near term catalysts would be strong 4Q08 results that is due out on 16 Feb, significant contract wins, and earlier than expected divestment announcements. Key risks will be project delays and execution setback

[winston]

From Crdeit Suisse:-

● In 2008 HYF secured a record project portfolio value totalling ~$821 mn, of which Algeria contributed ~$632 mn and China ~$189 mn. For the Chinese orders, actual contracts won in 2008 came in at 80% of our FY08 estimate as we had earlier expected more projects to come through around late 2008.

● Nevertheless, we remain confident of HYF’s positioning as a foreign player in China and its ability to capitalise on the opportunities within the China water sector, given its diversified exposure to the water value chain, track record and credit lines. We hence assume partial rollover of new projects into 2009 and raise our 2009E new orders by 8% to $198 mn.

● With the changes in assumed new orders and corresponding recurring income, we reduce our earnings estimates by 1-4% for 2008-2010. Our SOTP target price is S$2.52 (from S$2.63), a potential upside of 32% from current levels. OUTPERFORM.

● Within the Singapore water plays, HYF is our top pick. Key catalysts are continued order flow driving the share price, especially large-scale EPC orders, better-than-expected wins and better cost controls.

[kennynah]

and still...this share price is <S$5 .... i am lost for words...

[winston]

Istithmar reducing it's stake from 8.77 % To 6.55 %

[winston]

Not vested. This was on my watchlist because of the infra spending in China. With this sort of news, there's no more need to rush into it. BTW, the margins on the govt infra projects are razor thin. Therefore, your pencil must be very sharp else there will be execution risks and cost over-run after you get those projects..

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HYFLUX - Water treatment firm Hyflux reported fourth-quarter net profit fell 42 percent to S$13.4 million, hurt by S$5.2 million impairment of trade and other receivables in the three months ended Dec 31, 2008, said the Business Times.