Hyflux’s net profit drops by 43% to S$6.4m

Even after a 32% jump in its topline.

The global environmental solutions firm continued to disappoint this quarter, even after a jump in its revenue which was largely buoyed by the Qurayyat Independent Water Project (IWP) in Oman.

According to OCBC, despite a revenue of $133.5m, its gross margin dipped to 42.8% in the quarter, versus 75.1% in 2Q15 and 59.6% in 3Q14.

Meanwhile, even with the sharp decline in the net profit of Hyflux, it was including a boost by a non-cash fair value re-measurement gain of S$12.3m due to the Tianjin Dagang Desalination Plant in China.

“At the core operating level, we estimate that Hyflux would have turned in another loss of S$14.7m,” OCBC said.

OCBC also warns that Hyflux’s near-term outlook is more cautious, due to an expected increase in operational activities in the fourth quarter.

“This as a result of a ramp up in Magtaa Desalination Plant, Algeria, commissioning of Tuaspring Power Plant, Singapore (expected to be operational in early 2016); and full-scale development of QIWP, Oman (likely to be frontend loaded due to purchase of equipment),” OCBC said.

“However, it warns that the depressed oil prices will have an impact on its near-term outlook, as many countries have scaled back on infrastructure projects. Nevertheless, Hyflux highlights that it has a strong order book and adds that it will continue to strengthen its capabilities in anticipation of longer-term growth opportunities,” they added.