Hyflux Ltd has formally been awarded the Qurayyat Independent Water Project by Oman Power and Water Procurement Company (OPWP); this following the signing of the water purchase agreement between OPWP and Hyflux’s 85%-owned subsidiary, Qurayyat Desalination SAOC.

The project, with an estimated value of US$250m, will next move into the construction phase (worth US$210m), which will be carried out by wholly-owned subsidiary Hydrochem (S) Pte Ltd. Hyflux expects the project to have a material financial impact in FY15.

We understand that the project is expected to be complete by early 2017, hence the EPC revenue is likely to be split between FY15 and FY16, with a slightly heavier weightage in FY16.

As we have already taken this contract into our estimates, we maintain HOLD on the stock with an unchanged S$0.96 fair value.

Source: OCBC Research - 26 Mar 2015