Hyflux

Hyflux: Announced improved set of results, although annualized FY12 earnings are still short of street bullish estimates. Rev at $190.4m, +71% yoy and +37.1% qoq, while net profit at $17.5m, +21% yoy and +127% qoq. Gross margins came in at 36%, down 14ppt yoy, attributable to increasing rev mix from grp’s SG project, which has a lower margin profile than the MENA project. Asia ex-China market continues to be the major contributor since the commencement of the construction of Hyflux's Asia ex-China desalination plant contributing $146.1m in the qtr vs $22.0m yoy. Consequently, Asia ex-China represented 77% of Grp's total revenue in the qtr, a significant increase from 20% yoy. Going forward, grp note that the global outlook remains challenging. However still see opportunities in the MENA region and is well positioned to capture these. Grp’s orderbook at $1.6b, underpins earnings visibility till 2014. Grp has declared an interim div of 0.7c and balance sheet remains strong with net gearing stands at 0.4x. Ratings as follow: Maybank KE maintains Sell with $1.10 TP Nomura maintains Reduce with $1.00 TP