Daily news - 5 Nov

Hyflux Q3 profit surges 159% to $17.3m
Hyflux posted sterling results yesterday, with net profit for the third quarter ended Sept 30 surging 159 per cent from a year ago to $17.33 million, on the back of robust growth in municipal sales and earnings from its water infrastructure programmes. Its revenue hit a quarterly high of $177.42 million, a 177 per cent surge from a year ago, thanks largely to the key growth areas of China and the Middle East and North Africa (Mena), which accounted for 98 per cent of the group's revenue. Municipal sector sales, which made up 87 per cent of revenue, were more than six times higher than the same quarter last year. But industrial sales of membrane systems made up a smaller 13 per cent of revenue this time, down from 61 per cent last year. Total operating and finance expenses also surged 174 per cent to $154 million in the third quarter, while cash and equivalents grew 38 per cent year-on-year to $93.9 million as at end-September. 'We have managed costs and executed projects well in China and Algeria. Our total operating costs, including raw materials and consumables, are in line with the group's increased sales volumes,' said Hyflux CEO, president and managing director Olivia Lum. Given the current credit conditions, the group may see higher borrowing costs in the short term, she added. Hyflux's net gearing increased to 0.55 times as at end-September from 0.32 times a year ago.

ABN cuts Olam's profit target on trade financing concerns
Olam International Ltd, the commodity supplier, had its profit forecast and share price target cut by ABN Amro Asia Securities (Singapore) Pte on concern that its business may suffer as customers face difficulties getting trade finance. 'The shortage of trade finance threatens to restrict trade severely,' analyst Nirgunan Tiruchelvam wrote in an emailed report dated Monday. He forecast profit of $179 million this year, from a previous estimate of $190 million, and $193 million in fiscal 2010 from $210 million. The credit crunch has stoked concern that banks may choke off lending, potentially hurting trade flows. Still, the Singapore- based company hasn't had any defaults from customers in Asia and continues to receive letters of credit, according to an Oct 17 note from CFO K Ravikumar. Ten of 14 commodities handled by the company are not traded on exchanges, 'which makes Olam even more vulnerable to restricted trade financing', wrote Mr Tiruchelvam, who reiterated a 'sell' recommendation on the stock. Shares in Olam, which supplies nuts, spices and timber, dropped 14.5 cents, or 11 per cent, to close at $1.13 on the Singapore Exchange (SGX) yesterday. The stock has slumped 65 per cent in the past year compared with the Straits Times Index's 50 per cent drop. Yesterday's drop was the biggest since Oct 24.

Source: Kim Eng