Hyflux: IIFL reiterate Sell, TP #1.07. Note that growth outlook remains murky. Stock price performance could be largely driven by expectations of HYF winning the US$350m-400m desalination water contract in Oman.
Also, the recent divestment of 2 water projects in China could have eased concerns about the company’s ability to recycle capital through divestments of BOT projects. The on-balance sheet funding of Tuas II increases HYF’s net debt/equity to 1.02x in 2012 from 0.75x in 2010, leaving limited financial headroom to fund the Oman project if HYF fails to secure project financing.
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