Hyflux

Hyflux: 2Q10 results in line expectations. 1H10 revenue +9% yoy to $242m, while net profit +9% yoy to $33.7m. Growth was mainly attributable to the continued progression of its Magtaa, Algeria desalination project. With this, the Middle East North Africa (MENA) region now makes up 77% of Group revenue. Overall net margins of 14% held steady, with the Group exercising strong project execution and cost control. Declared maiden interim div of 1 ct/sh…

Overall orderbook including O&M (recognized over 25 yrs) stands at $1.72b. However we remain concerned at the prospect of a lengthy delay/ cancellation of the $1.2bn Libyan projects, which would hinder earnings growth. Without a replacement for the mega projects, EPC orderbook now declines to $633m which we estimate will be completed by next year. KE maintains hold with SOTP target of $2.85.