Hyflux's Desalination Project Under Scrutiny

SINGAPORE – Financial analysts have taken a closer look at Hyflux after the announcement of their ambitious Tuaspring desalination plant in March 2011. They determined that for Hyflux to hit its profit targets, a significant portion of the excess power generated would need to be sold to the grid.

Analysts Stand Firm Despite Challenges

Interestingly, despite potential challenges, many analysts have either maintained or upgraded their outlook for Hyflux’s share price, buoyed by optimistic financial projections. These insights were pivotal as they became part of the defense in the ongoing criminal trial against former CEO Olivia Lum.

The Defense’s Case Unfolds

During the trial, senior counsel Davinder Singh referenced five critical research reports from reputable firms like DBS and JP Morgan. These documents were instrumental in establishing Hyflux’s financial landscape shortly after its project announcement.

Key Questions Raised in Court

Ms. Winnifred Heap, who previously led corporate communications at Hyflux, was cross-examined regarding the information analysts would require to forecast the plant's excess electricity capacity and its subsequent financial impact. She admitted that while consulting an expert might not be necessary if the needed data is public, understanding the nuances of electricity consumption is crucial.

The Competitive Edge of Analysts

Singh probed further, questioning how analysts differentiate themselves in their research. Heap emphasized the importance of financial acumen and technical validation from industry specialists to ensure accurate analysis.

Varied Analyst Recommendations

Highlighting a report from IIFL, Singh pointed out that analysts projected Hyflux would need to offload at least 65% of excess electricity to achieve a decent return on investment. While IIFL raised its target price for Hyflux, it simultaneously kept a 'Sell' rating due to concerns about the company's future projects.

Maintaining Optimism Amid Uncertainty

Other analysts expressed a more optimistic outlook, suggesting firm buy ratings based on the Tuaspring contract, even as uncertainties loomed over another significant order in Libya.

Court Proceedings Continue

As the trial progresses, more cross-examinations loom. The hearing continues with implications for Hyflux’s future and the legal repercussions facing its former executives.