Brokers' Take
Expansion may strain Hyflux's finances
15 November 2004
The
Straits Times
UOB Kay Hian
UOB KAY HIAN has kept its sell call on Hyflux, despite the water
treatment specialist reporting a 105 per cent jump in third-quarter
profit to $6.7 million on Wednesday.
'Given the bumpy nature of the business, the results are considered
to be in line with our expectation,' it added, keeping its forecast
of Hyflux's full-year profit for this year at $20.2 million.
In an earlier report on Hyflux last Tuesday, UOB Kay Hian expressed
concerns over the 'high financial risks' Hyflux was taking with
its capital-intensive expansion.
'Hyflux's growth will peak next year and slow to low double-digit
due to a high profit base and intense competition in the industry,'
it said.
It pegs its fair value for Hyflux at only $1.50, noting that the
stock is overvalued. Hyflux ended seven cents up at $2.50 on turnover
of 3.1 million shares last Friday. SELL
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