Hyflux

Hyflux: 2QFY14 net profit increased 247% to $61.4m, while revenue fell 42% to $80.6m, reflecting the timing of projects commencement in FY2014. Other income jumped to $85.2m from a low base, contributed by the net gains on sale and leaseback of Hyflux Innovation Centre (HIC) in 2Q2014. Bottom line was also buoyed by a 46% drop in raw material costs to $43.5m, slightly offset by other cost increases. Management expects 2Hto remain slow. The delay in connection to the national power grid to the Tuaspring power plant will continue to have operating cost implications over the next few quarters. Meanwhile, the momentum of municipal projects being made available for tender has been slower than anticipated in the past year. Interim dividend of 0.7¢ declared. Hyflux is trading at 1.8x P/B Latest broker ratings: OCBC maintains Sell with $0.75