Hyflux

Hyflux: 9M12 results below. Credit Suisse notes revenue of $484m was 70% of consensus FY12 forecasts, while pretax profit of $49m was 54% of consensus FY12 forecasts. Revenue decreased to $155m in 3Q12 upon the completion of a project in Algeria. Nevertheless 3Q12 pretax profit margin of 10.8% was stable compared to 2Q12 margin of 11.3%, as the co continued to be impacted by higher raw material and consumables costs. The house lowers FY12-13e forecasts by 18-34% due to lower margin expectations. Retains Outperform rating but cuts TP to $1.60 from $1.70. Maybank KE Research also maintains at Sell with TP $1.10, cites rich valuations and uncertainty of order book. Nevertheless, Hyflux could see a an upcoming catalyst. CS notes Hyflux is one of the two favourite bidding consortia for a 190,932 m3/day independent water project (IWP) at Ghubrah, Oman. It is competing with the Malakoff/Sumitomo/Cadagua consortia for the project, which is expected to be announced around 5 November. This follows a tender process in which seven groups were pre-qualified to participate in the tender. If awarded the contract, the signing of the water purchase agreement and financial close are expected in 1Q13. As the water from the project is required urgently by 2013, the Ghubrah IWP will be developed in two phases. Phase 1 will provide 30 m gallons per day and is due to be completed by May 2013. Phase 2, which will provide the remaining 12 m gallons daily, is set to be operational by April 2014. The total EPC value is estimated to be worth about US$200-300m.