HWT – BT

Hyflux trust’s full-year distribution beats forecast

Second-half 2.79-cent DPU brings year’s distribution to 4.96 cents, against forecast of 4.88 cents

HYFLUX Water Trust yesterday reported distribution per unit (DPU) of 4.96 cents for its first full year of operations, 2 per cent above the forecast of 4.88 cents. This represents a yield of 17.1 per cent based on yesterday’s closing price of 29 cents a unit, or 14 per cent based on its Dec 31 close of 35.5 cents.

DPU for the second half ended Dec 31, after waiver of distributions in respect of sponsor units, was 2.79 cents. Total distributable cash was $10.2 million, among 205.5 million units, excluding sponsor units held by Hyflux Ltd, a Singapore-listed water treatment company that had divested water treatment plants in China to set up the trust.

Without the waiver from Hyflux, full-year distribution would have been 3.4 cents, or 1.56 cents less. Distribution is expected to hit 5.42 cents in 2009, the company said.

Hyflux Water Trust recorded a profit after tax of $10.3 million for the full year, or $3.8 million for the fourth quarter, while revenue hit $54 million, or $9 million for the fourth quarter. Revenue came in 5 per cent above estimates.

The trust holds cash and cash equivalents of $35.6 million.

No comparative results for the previous year were provided as the trust was set up only in November 2007.

Hyflux Trust said bank credit was tightening, which made new acquisitions through debt ‘a major challenge’. Equity financing was ‘currently not attractive’.

China is also likely to be hard hit by the current crisis, the trust noted, but said that guaranteed tariffs and a tariff adjustment mechanism would help to maintain margins.

By the end of last year, the trust’s initial portfolio of water treatment plants had a total designed capacity of 380,000 cubic metres a day, with utilisation volume of 177,000 cubic metres a day.

Adding newly acquired plants, the total design capacity as at end-2008 was 520,000 cubic metres a day, while it currently has right of first refusal on plants from its parent Hyflux with capacity of 945,000 cubic metres a day.

Hyflux said the overall medium to long-term outlook for the global water sector, and China in particular, would be strong.

‘Investment opportunities in the water sector are driven by increasing industrialisation, urbanisation and the (China) government’s policy directives to address the country’s critical water pollution and water shortage issues. With improvement in the global credit and capital markets in the future, HWT will be better positioned to deliver on growth,’ it said.