The Straits Times / The Business Times News on Hyflux

Hyflux net income up 77%

Shares fall 13 cents to $2.97 after an intra-day high of $3.12

WATER and fluid treatment company Hyflux posted a 77 per cent surge in net profit to $46.3 million for the year ended Dec 31.

The $46.3 million net earnings attributable to shareholders compare with $26.1 million in 2004 and came on the back of a 48 per cent rise in revenue to $131.5 million.

Including minority interest, net profit was $49.2 million, up from $27.9 million.

In the stock market yesterday, Hyflux dived 13 cents to the day's low of $2.97 after trading earlier at up to $3.12.

Nearly two million shares changed hands. Yesterday's close was almost a dollar off the shares' 52-week high of $3.92 achieved on July 26.

Group chief executive and president Olivia Lum was nevertheless upbeat, saying: 'I am pleased that Hyflux has performed well for FY2005, driven mainly by higher municipal sales from Singapore, China and the Middle East.

'With the completion of these municipal projects in one to three years' time, we could experience good recurring income of about $80 million to $90 million a year for the next 20-30 years.

'At the same time, we continue our R&D to develop new membrane applications and look for growth opportunities in the higher margin industrial sector, with a focus on larger, better yielding liquid process projects.'

Municipal sales accounted for 56 per cent of total revenue this time around, compared to 19 per cent the previous year. But in line with this, raw materials, consumables and accruals almost doubled to $69.5 million.

Personnel expenses also increased 79 per cent to $16.7 million while other operating expenses rose by 45 per cent to $15.3 million, owing largely to the higher turnover and costs in developing new markets, expanding existing markets and securing and executing larger size projects, the company said. Hyflux made $8.2 million selling its building here and leasing it back, and gained another $13 million in the value of its financial instruments.

Earnings per share rose from 5.55 cents a share to 9.21 cents while net asset value per unit went up from 35.7 cents to 36.8 cents.

A company statement said: 'As the group expands it presence in China and the region, we will adopt an asset-light strategy by divesting our interest in the capital-intensive build-own-operate/transfer (BOO/BOT) such that we are able to release financial resources as well as debt capacity to take on new projects and new markets.'

As examples of the new strategy, it pointed to the divestment of half of SingSpring, the sale and leaseback of Hyflux Building and the formation of SinoSpring with RB (Labuan) Berhad to invest in BOO/BOT projects in China.