Some traders attribute Hyflux's pullback to note from KE calling for Trading Sell with downside target of $2.02, while others say concerns about Hyflux Water Trust not being able to secure funds to buy 9 of its China-based water treatment plants may be weighing on stock. Hyflux granted trust first right of refusal in Jun to acquire plants, valued at $180 m, saying move in line with strategy to monetize assets. Proposed divestment subject to shareholders' approval but no update provided since then.
DBS Vickers downgrades Hyflux Water Trust to Hold from Buy, citing concerns about getting funds for future acquisitions. Says trust may not end up buying initial portfolio of 9 China-based water treatment assets from sponsor Hyflux given tougher credit conditions; "there is considerable uncertainty in the timing and quantum of the acquisition-driven growth story for HWT." Cuts target price to $0.53 from $0.90, lowers FY08-09 DPU forecasts by 3%, 13% respectively. Adds recent resignation of CFO Grace Goh - touted as instrumental in raising trust's investment profile - may further compound situation.
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