The Straits Times / The Business Times News on Hyflux

Hyflux earnings surge to $14m after asset sale

WATER treatment specialist Hyflux reported yesterday that second-quarter net profits more than doubled to $14 million, thanks partly to gains booked from the sale of its headquarters earlier this year.

Revenues for the quarter ended June 30 rose 5 per cent to $18.8 million, boosted yet again by higher takings from the Middle East, which made up a fifth of total sales.

The figure would have been higher, but for lower China sales - related to the timing of the completion of project milestones when revenues are booked.

Hyflux said it is on track to achieve another year of growth, revealing that its order book now stands at $336 million, up significantly from $237 million in February.

Indeed, it announced yesterday that an earlier contract won by its joint venture with Dubai's Istithmar to build a desalination plant for Dubai's Palm Jumeirah resort has been expanded to include two plants. The addition doubles the project value to US$81 million (S$134 million).

For the half-year ended June 30, profits were up 164 per cent to $23 million; revenues rose 44 per cent to $43.1 million.

The sharp jump in Hyflux's bottom line was due largely to an $8.5 million gain from selling its Kallang Bahru headquarters to Ascendas Real Estate Investment Trust in April. Hyflux continues to occupy the building, leasing it from Ascendas.

The $19 million sale is part of Hyflux's 'asset-light' strategy to free up cash so it can embark on more projects.

'We are confident that this move to unlock the hidden value of our assets will help to lighten our balance sheet and free up resources for further scaling up of our business,' said chief executive Olivia Lum.

Also giving a boost to earnings was the adoption of a new accounting standard. This resulted in a $3.1 million gain in the fair value of derivatives that Hyflux uses to hedge itself against foreign exchange, interest rate and commodity price risks.

Said Ms Lum: 'We are confident that we are on track for another year of growth as we continue to develop markets that provide sustainable growth potential, such as the Middle East, China and India.'

Earnings per share for the quarter were 4.15 cents, up from 1.84 cents. Net asset value per share was 47.9 cents, up from 35.9 cents as at Dec 31.

The stock closed two cents up at $3.68. It has risen 81 per cent since the start of the year.