Hyflux down on Libya projects risk

Stock Name: Hyflux
Company Name: HYFLUX LTD
Research House: JP Morgan Chase

Shares of Singapore water firm Hyflux (HYFL.SI) fell as much as 8.6% on Tuesday due to concerns about how the political unrest in Libya will impact its business in the country.

At 9:26 a.m., Hyflux shares were down 7.6% at $1.94 on a volume of 1.4 million shares.

J.P. Morgan said Hyflux is still in negotiations with the government in Libya on two seawater desalination plants, and the firm has also won a US$100 million ($127.9 million) engineering, procurement and construction contract for another desalination plant.

“We see risks that these contracts might not be honored if there is a change in government given these projects are co-owned with the existing government,"” the brokerage said in a report.

“If there is no change in government, we would still expect further delays for these contracts before work can begin,” it added.

J.P. Morgan downgraded Hyflux to neutral from overweight and lowered its target price to $1.90 from $2.33.