Stock Upgraded: Hyflux upgraded from reduce to neutral by UBS

UBS Investment Research has upgraded its rating for Hyflux Ltd to "neutral 2" from "reduce 2" and increased its target price to 2.70 sgd per share from 2.30 after the company announced it won a contract in Algeria. Hyflux has a 10.2 pct stake in a consortium that won a 205 mln usd, 25-year contract to build and operate a seawater desalination plant in Algeria. More importantly, UBS said a subsidiary of Hyflux will undertake all the engineering, procurement, and construction work for the project, which it estimates is worth 328 mln sgd. "The project will probably commence in mid-2007 and revenue recognition is likely to be in 2008 and 2009. "We estimate it would amount to an additional 20 mln sgd in earnings in those years," UBS said in a client note. "We revise up our EPS (earnings per share) estimate for 2008 from 0.15 sgd to 0.19 sgd." UBS expects Hyflux's net profit to grow to 38 mln sgd this year from 21 mln last year, then to 56 mln in 2007, and to 98 mln in 2008. At 11.17 am, Hyflux was up 0.04 sgd or 1.54 pct at 2.64 with 195,000 shares traded.