Asia Water downgraded to 'neutral' ( Kim Eng)

Kim Eng Securities has cut its rating on Asia Water Technology Ltd to "neutral" from "buy" because of the recent run-up in the stock which has narrowed its price gap with its peers. In a client note, Kim Eng also trimmed its 2006-2007 earnings per share estimates after the company's recent share placements which led to dilution given an enlarged share base. Asia Water has conducted two new share placements this month and issued a total of 27.9 mln shares for proceeds of 14.3 mln sgd. In addition, the group will also be issuing 11.96 mln new shares for the acquisition of a minority stake in Wuhan Kaidi Water services. "The stock has risen 46 pct since our last update on March 1. Factoring in EPS dilution from the enlarged share base and acquisition of the minority stake in Wuhan Water Services, our 2006-2007 EPS have been cut by 8-10 pct," it said. At 10.18 am, Asia Water was flat at 0.75 sgd with just 69,000 shares traded.