JPMorgan downgrades Hyflux (600.SG) to Neutral from Overweight and cuts its target to $1.90 vs $2.33 following political unrest in Libya which is likely to hurt orders for the water company.

The house notes that Hyflux is in exclusive talks with the Libyan government for two sea-water desalination plants that could add US$1 billion to its order book and is awaiting permission to start construction on a US$100 million already awarded 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. If there is no change in government, we would still expect further delays for these contracts before work can begin,” the house says in a note. 

 

Hyflux is down 6.7% at $1.96.