Hyflux Ltd has officially launched Singapore’s second and largest reverse osmosis (SWRO) desalination plant on 18 Sep. According to management, the desalination plant is not only a showcase of its membrane technology but also strengthens Hyflux’s international track record in large-scale desalination plants, putting the company in a strong position to provide clean, affordable and sustainable water solutions to meet worldwide demand. During the Tuaspring launch, we also had a short chat with management and it appears that Hyflux is slowing but surely turning its focus back to the MENA region. But until we see the award of a sizable contract from any of the above mentioned markets to replenish its order book, we opt to maintain our HOLD rating and S$1.215 fair value (still based on 20x blended FY13/FY14F EPS).
Officially launched Tuaspring
Hyflux Ltd has officially launched Singapore’s second and largest reverse osmosis (SWRO) desalination plant on 18 Sep. The construction of the plant, currently Asia’s largest seawater desalination facility with a daily capacity of 318.5m3, took around two years to complete - both on time and within budget. Meanwhile, the co-gen power plant is also on track to be completed on schedule – we estimate that this is likely to translate into some S$400m of EPC revenue to be recognised in FY13 and FY14. In addition, Hyflux has secured a S$720m 18-year term loan facility to fund the desalination and power plants.
Showcase of technology and track record
According to management, the desalination plant is not only a showcase of its membrane technology but also strengthens Hyflux’s international track record in large-scale desalination plants, putting the company in a strong position to provide clean, affordable and sustainable water solutions to meet worldwide demand. Indeed, management remains upbeat about the global water industry, noting that increasing urbanization and industrialization are fuelling greater water scarcity, while tougher legislation on water and wastewater discharge quality are also drivers for the industry.
Slowly looking at MENA again
During the Tuaspring launch, we also had a short chat with management and it appears that Hyflux is slowing but surely turning its focus back to the MENA region. In addition, we note the presence of many delegates from that region at the launch, as well as delegates from both China and India – these are all key growth markets that Hyflux has previously identified. But until we see the award of a sizable contract from any of the above mentioned markets to replenish its order book, we opt to maintain our HOLD rating and S$1.215 fair value (still based on 20x blended FY13/FY14F EPS).
Hyflux Ltd has officially launched Singapore’s second and largest reverse osmosis (SWRO) desalination plant on 18 Sep. The construction of the plant, currently Asia’s largest seawater desalination facility with a daily capacity of 318.5m3, took around two years to complete - both on time and within budget. Meanwhile, the co-gen power plant is also on track to be completed on schedule – we estimate that this is likely to translate into some S$400m of EPC revenue to be recognised in FY13 and FY14. In addition, Hyflux has secured a S$720m 18-year term loan facility to fund the desalination and power plants.
Showcase of technology and track record
According to management, the desalination plant is not only a showcase of its membrane technology but also strengthens Hyflux’s international track record in large-scale desalination plants, putting the company in a strong position to provide clean, affordable and sustainable water solutions to meet worldwide demand. Indeed, management remains upbeat about the global water industry, noting that increasing urbanization and industrialization are fuelling greater water scarcity, while tougher legislation on water and wastewater discharge quality are also drivers for the industry.
Slowly looking at MENA again
During the Tuaspring launch, we also had a short chat with management and it appears that Hyflux is slowing but surely turning its focus back to the MENA region. In addition, we note the presence of many delegates from that region at the launch, as well as delegates from both China and India – these are all key growth markets that Hyflux has previously identified. But until we see the award of a sizable contract from any of the above mentioned markets to replenish its order book, we opt to maintain our HOLD rating and S$1.215 fair value (still based on 20x blended FY13/FY14F EPS).
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