Hyflux Ltd saw 3Q12 revenue rising 77% YoY to S$155.0m, while net profit also increased 15.1% YoY to S$14.5m. Gross margin also recovered to 41.2% in 3Q12 from 34.5% in 2Q12 and also close to the 43.4% seen in 3Q11. For 9M12, revenue jumped 70% to S$484.4m, meeting 82% of our full-year forecast, while net profit rose 17% to S$39.7m, or 62% of FY12 forecast. Hyflux notes that the current environment remains challenging, but management believes that the fundamental demand for water remains strong, especially in countries like China, India and MENA. We are also keeping our FY12 and FY13 estimates unchanged and are raising our fair value from S$1.35 to S$1.44 as we roll forward our 18x peg to blended FY12/Fy13F EPS. Maintain HOLD; but fresh catalyst could come in the form of a substantial contract win.
3Q12 gross margin improved to 41.5%
Hyflux Ltd saw 3Q12 revenue rising 77% YoY to S$155.0m, with Asia ex-China and the municipal sector driving the revenue increase. Net profit also increased 15.1% YoY to S$14.5m; and more importantly, core pre-tax profit came in at around S$16.2m versus a loss of S$3.2m in the year ago quarter. Although both revenue and earnings fell 19% and 17% QoQ, we note that margins have actually improved, where gross margin recovered to 41.2% in 3Q12 from 34.5% in 2Q12 and also close to the 43.4% seen in 3Q11. For 9M12, revenue jumped 70% to S$484.4m, meeting 82% of our full-year forecast, while net profit rose 17% to S$39.7m, or 62% of FY12 forecast.
Outlook slightly more cautious
Going forward, Hyflux notes that the environment remains challenging as the uncertainties on the global economic front will continue to have an impact on the pipeline of water infrastructure projects in its key markets, such as Asia including China and MENA. But management believes that these projects are not shelved, merely delayed, as the fundamental demand for water remains strong, especially in countries like China, India and MENA. Currently, Hyflux is in the process of bidding for several large-scale water projects in MENA (Oman, Saudi and even Kuwait); also working towards the financial close of its Dahej project in India (likely in 1H13).
Maintain HOLD with new S$1.44 fair value
And with the desalination portion of Tuaspring likely to be substantially completed by end 2012, it is not surprising that management expects to see a “good” FY12 performance. While we are keeping our FY12 and FY13 estimates unchanged, we are raising our fair value from S$1.35 to S$1.44 as we roll forward our 18x peg to blended FY12/FY13F EPS. Maintain HOLD; but fresh catalyst could come in the form of a substantial contract win.
Hyflux Ltd saw 3Q12 revenue rising 77% YoY to S$155.0m, with Asia ex-China and the municipal sector driving the revenue increase. Net profit also increased 15.1% YoY to S$14.5m; and more importantly, core pre-tax profit came in at around S$16.2m versus a loss of S$3.2m in the year ago quarter. Although both revenue and earnings fell 19% and 17% QoQ, we note that margins have actually improved, where gross margin recovered to 41.2% in 3Q12 from 34.5% in 2Q12 and also close to the 43.4% seen in 3Q11. For 9M12, revenue jumped 70% to S$484.4m, meeting 82% of our full-year forecast, while net profit rose 17% to S$39.7m, or 62% of FY12 forecast.
Outlook slightly more cautious
Going forward, Hyflux notes that the environment remains challenging as the uncertainties on the global economic front will continue to have an impact on the pipeline of water infrastructure projects in its key markets, such as Asia including China and MENA. But management believes that these projects are not shelved, merely delayed, as the fundamental demand for water remains strong, especially in countries like China, India and MENA. Currently, Hyflux is in the process of bidding for several large-scale water projects in MENA (Oman, Saudi and even Kuwait); also working towards the financial close of its Dahej project in India (likely in 1H13).
Maintain HOLD with new S$1.44 fair value
And with the desalination portion of Tuaspring likely to be substantially completed by end 2012, it is not surprising that management expects to see a “good” FY12 performance. While we are keeping our FY12 and FY13 estimates unchanged, we are raising our fair value from S$1.35 to S$1.44 as we roll forward our 18x peg to blended FY12/FY13F EPS. Maintain HOLD; but fresh catalyst could come in the form of a substantial contract win.
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