The Straits Times / The Business Times News on Hyflux

Hyflux soars on role in Temasek's business trust

MANY investors may have written off Hyflux, but a robust performance this past week showed there was still life in the former market darling.

The stock closed up 30 cents yesterday at $2.72 on a heavy volume of 8.8 million shares, about five times the average daily volume over the past year.

Its gain over the week was 36 cents or 15 per cent.

One boost came from news earlier this week that Temasek Holdings will list Singapore's first infrastructure business trust.

Hyflux will sell part of its stake in Singapore's first desalination plant, SingSpring, into the business trust and so benefit from a capital gain. Temasek and Hyflux own equal stakes in the plant.

Hyflux will also own units in the trust.

The CitySpring Infrastructure Trust has another asset - Singapore's sole town gas supplier. The trust also plans to invest in other infrastructure assets in the region.

Investor who piled into Hyflux are most likely banking on the infrastructure sector prospering in much the same way as real estate investment trusts have.

Good news for Hyflux shares could also have come from the announcement that the new infrastructure trust has been given the right of first refusal to buy Hyflux's China projects.

This will enable Hyflux to recycle its capital so it can take on other projects.

The low for Hyflux shares was $2.05, hit last June, on worries about its order book level. Analysts were also worried about margins on its mega municipal projects in China.

It issued disappointing third-quarter results in November, with net profit slumping 86 per cent to $1.88 million, amid warnings of a 'marginally profitable' fourth quarter.

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