Hyflux Ltd – Annual Report FY 2010 and Preference Share Offer

Founded in 1989, Hyflux is a water solutions company that builds and constructs desalination, water recycling projects particularly in China, India and the Middle East and North Africa (MENA) region.

In March 2011, Hyflux won the contract from PUB to build and operate Singapore’s second seawater desalination plant. The contract is worth $890 million. Including this, the total order book is $2.2 billion, which was 20% higher than end 2009.

The following key numbers were extracted from the annual report of Hyflux Ltd for the year ended 31 December 2010.

2010 Change over 2009
Turnover $569.7m +9%
Profit to shareholders $88.5 m +18%
Earnings per share 10.52¢ +11%
Dividend per share 4.17¢ +25%
Dividend payout 40%
Return on equity (ROE) 17.6%
Net Gearing ratio (times) 0.73
Net Assets per share 58.60¢ +27%
Share Price at 31/12/2010 $2.32

Hyflux did well last year. Profit attributable to shareholders increased 18% to $88.5 million. Earnings per share improved by 11% to 10.52 cents. To reward shareholders for good corporate performance, higher dividend per share was proposed at 4.17 cents which resulted in dividend payout rate of 40% on earnings. Net asset per share had increased 27% to 58.6 cents.

Being in a capital intensive and a growth industry, Hyflux had a higher net gearing ratio of 73% (2009 was 60%).

Hyflux today announced the public offer of $200 million (with upsize option to $400 million) 6% Cumulative Non-convertible Non-voting perpetual Class A Preference Shares at issue price of $100 per share. These preference shares are callable at the option of Hyflux in 2018. The net proceeds will be used to fund the Hyflux’s water and infrastructure projects and for general working capital.

Ms Olivia Lum (Group President & CEO) has the largest shareholding with deemed interest at 31%. Being the founding member and substantial shareholder, Ms Olivia Lum has a keen interest in ensuring that the organisation do well.

Share price as at today, 13 April, was $2.19. This is 5.6% lower than share price at end last year. Hyflux’s share price declined in the first quarter 2011 due in part to the unrest in Libya and the termination of the desalination project in Tobruk, Libya.

Copyright © 2011, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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