Tuesday, August 13, 2013

Hyflux: 1H13 tracking below forecast (OCBC)

Hyflux:
Fair value S$1.215
add: 12m dividend forecast S$0.030
versus: Current price S$1.300

1H13 tracking below forecast
• Met 40% of FY13F earnings
• Still muted outlook
• May see knee-jerk reaction

Hyflux Ltd reported that its 2Q13 revenue fell 24.6% YoY (but rebounded 11.1% QoQ) to S$138.4m, while net profit came in around S$17.7m, +3.0% YoY and 119.9% QoQ. 1H13 revenue of S$262.9m fell 17.6% and met about 36.0% of our full-year forecast.
While net profit climbed 2.1% to S$25.2m, it only met 32.8% of FY13 estimate, and we were expecting it to cover about 40%. Hyflux declared an interim dividend of S$0.007/share, same as 1H12. While the company continues to show a relatively healthy order book of S$2731m, we believe that the outlook may still be muted, given the credit crunch situation in China. As such, we are lowering our FY13 estimates for revenue by 9.6% (FY14 by 11.1%) and earnings by 12.8% and 14.0% respectively. Our fair value correspondingly falls to S$1.215 (based on 20x blended FY13/FY14F EPS). We maintain our HOLD rating; but we do not rule out any near-term knee-jerk reaction.

1H13 tracking below forecast
Hyflux Ltd reported that its 2Q13 revenue fell 24.6% YoY (but rebounded 11.1% QoQ) to S$138.4m, while net profit came in around S$17.7m, +3.0% YoY and 119.9% QoQ, last night. Note that 1Q tends to be the seasonally weaker quarter and business tends to be back-end loaded but even then, we note that the overall performance is tracking below our expectations. 1H13 revenue of S$262.9m fell 17.6% and met about 36.0% of our full-year forecast. While net profit climbed 2.1% to S$25.2m, it only met 32.8% of FY13 estimate, and we were expecting it to cover about 40%. Hyflux declared an interim dividend of S$0.007/share, same as 1H12.

Outlook may still be muted
While the company continues to show a relatively healthy order book of S$2731m, we note that the portion of EPC orders have fallen from S$1025m at Dec 2012 to S$792m at Jun 2013, while the treatment orders remain relatively flat at S$1939m (versus S$1872m). In addition, Hyflux said it has withdrawn from two water projects from the Hechuan Industrial Park in Chongqing City due to a foreseeable low off-take volume of water. Nevertheless, Hyflux intends to focus on opportunities in growth areas in China like the Yunnan province; and also working on securing projects in the Indian states of Gujarat, Tamil Nadu, Karnataka and Andhra Pradesh. It adds that selective markets in MENA have started to revive development plans to improve their water scarcity situation.

Paring fair value to S$1.215
We are lowering our FY13 estimates for revenue by 9.6% (FY14 by 11.1%) and earnings by 12.8% and 14.0% respectively. Our fair value correspondingly falls to S$1.215 (based on 20x blended FY13/FY14F EPS). We maintain our HOLD rating; but we do not rule out any near-term knee-jerk reaction.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 07/08/13

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