Brokers' Take

Hyflux, Dec 16 closing : $1.56

16 December 2003
The Business Times

CLSA Asia-Pacific Markets

WE attended a signing ceremony where Hyflux announced key financial details of their $200 million desalination project, Singapore's first. With funding largely secured over a large extent of the project life, demand underpinned by Singapore's requirements, costs like fuel/inflation passed through as variables, the key risk is now execution. Success would mean Hyflux's ability to bid for other projects globally will be significantly enhanced. The pullout of Ondeo (probably due to financing constraints), arguably more experienced in this area, does raise execution risk. We have used a 19x forward PE to arrive at end-04 price target of $1.75. Maintain OUTPERFORM.