Thursday, June 27, 2013
Hyflux: OCBC maintains Hold but sees value emerging. HOuse note that Hyflux Ltd recently saw a massive correction in its share price, plunging nearly 13.1% from a high of $1.37 on 10 Jun to a low of S$1.19 on 24 Jun; it was down 6.1% on 24 Jun itself, no doubt spooked by recent reports of credit tightening in the mainland. But these worries while valid – are overwrought. House believe that Hyflux should still have access to funds from overseas, and this should put the company on a better footing against local Chinese companies when it comes to bidding for projects. Nevertheless, as the market appears to be taking a more “risk off” approach, house now use a lower 20x peg (versus 22x previously) against FY13F EPS, which results in fair value easing from $1.44 to $1.30. However, value is starting to emerge, especially closer to its recent $1.19 low; hence house maintain HOLD rating on the stock.