Attention for Singapore Water co’s: Hyflux Trust

By Travis Johnson, Stock Gumshoe, August 13, 2008

Hyflux is a fairly large cap company in Singapore, probably the largest of all the Singapore water companies (and there are many of them — water is big business in Singapore), but it’s not much noticed here in the U.S. And beyond that, the company recently spun off a Trust that owns the actual water treatment plants that Hyflux builds, the Hyflux Water Trust. And that’s positively beneath the US radar.

This comes to mind today not just because Hyflux Water Trust recently released earnings, and because they’re at a pivotal point in the development of their strategy (they have the opportunity to purchase a new swath of plants from the parent), but because they got mentioned in Daily Wealth. Daily Wealth is the Stansberry & Associates e-letter that they use to build their email lists, share some investment thoughts, and advertise their paid newsletters.

Tom Dyson, who focuses on income stocks and on international stocks at Stansberry, wrote recently about Singapore water stocks, and said he’s found a favorite — and in the process, he shared a few words about Hyflux Water Trust, which has a nice yield, low leverage, and, in my opinion, a very good long term prognosis as long as you believe the Chinese will continue to encourage private investment in their water infrastructure (all of Hyflux Water Trust’s plants are in China, though that may not remain true forever — Hyflux does build plants in other countries on occasion, too).

And for a tiny stock like the Trust, that attention appeared to get people moving — the pink sheets shares of Hyflux Water Trust trade rarely, but already this morning they’ve traded twice their normal volume and are being bought at a signficant premium to where the shares closed in Singapore overnight. I still like them, and the price is fairly close now to where it was when I bought the shares, but I would avoid paying this kind of premium for them (they closed at .65 in Singapore, which is US .46, and are trading this morning at .50, so a premium of almost 10%). I’m fairly certain that there wasn’t earth-shaking news about Hyflux Water Trust after the Singapore close, so there’s no need to rush.

And on the earnings? Hyflux Water Trust beat expectations with their earnings when they released them last week, largely due to cost containment. They’ll be distributing 1.3 ...

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