Hyflux

Hyflux: A consortium comprising Hitachi and Hyflux has signed a water purchase agreement (WPA) for a seawater desalination project in Dahej, India. The WPA will become effective upon financial close for the desalination plant, which the house expect to be achieved before 4Q13. Hyflux is expected to undertake EPC work worth US$420 mn (S$527 mn), lifting Hyflux’s EPC order book of S$712 mn as of June 2012. Separately, Hyflux announced that the development and construction of Tuaspring Desalination Plant is on track and Hyflux will commence discussion with financial institutions to secure non-recourse project financing for the project. Hyflux has been relying on corporate funding for the construction of the plant, with a blended cost of borrowing at 5% through its Multicurrency Debt Issuance Programme and S$400 mn preference share issuance. CS maintains an OUTPERFORM rating with a P/B of 2.2x on an adjusted basis, and noted that the company is trading near its 2008/09 lows.