Hyflux first-quarter profit climbs 5% to $8m

But revenue slipped 8% yoy.

OCBC said that Hyflux's 1Q13 results performance showed a slow start, which is characteristic for the company as its weakest quarter. The sluggish opener did not deter the company's optimism though, as it expects to demand to pick up in the following quarters.

Here's more from OCBC:

Hyflux Ltd reported its 1Q13 results last night, with revenue slipping 8% YoY and 38% QoQ to S$124.5m, or around 17% of our full-year forecast. According to management, the group’s municipal projects in Asia, ex-China, contributed some 87% of top-line (mostly coming from Tuaspring), China provided 8%, while MENA 5%. However, we are not perturbed by the seemingly slow start as 1Q is traditionally their weakest quarter. Net profit rose 5% YoY (though down 62% QoQ) to S$8.0m, or 10.2% of our FY13 estimate; but again, still in line with expectation. Gross margin was also slightly better at 40% versus 37% in 1Q12.

Tuaspring Desalination Plant commissioning soon. Hyflux updated that its Tuaspring Desalination Plant is currently undergoing testing and commissioning. The project is scheduled to start operations in 2H13 and begin to contribute to its recurring income stream. Management did not give an indication of its order book, which last stood at S$2.9b as of end-2012, with nearly S$1.9b coming from O&M. Separately, Hyflux has also started construction of the cogeneration power plant and that is on track for completion in the next 18-24 months. We estimate that some S$500-600m of EPC revenue of the S$1.05b project has been booked in FY12; this leaves some S$400m left to be booked in 2013-2014 for the power plant construction.

Expects pent-up demand for water treatment. Going forward, Hyflux remains fairly optimistic about its prospects. It notes an improvement in the global water industry as governments are investing in large-scale water projects due to pent-up demand; and as more projects are being put up for tender to tap on private sector funding. Hyflux says it will actively pursue opportunities in Asia and MENA.