Asia Env drops 20%

Asia Environment drops 20% today, from 0.3 a few days ago to 0.23 today. Today lowest 0.215 and highest 0.27. This is mainly because Asia Environment guided that it would incur losses for 4Q09 due to doubtful debt provisions, impairment of investment in a project that is currently undergoing arbitration proceedings and increased associate losses.

We expect AENV’s BOT earnings to continue to grow as nine other water plants are expected to start operating by 4Q10. However, AENV, unlike SOE-backed or larger companies with stronger balance sheets with the financial muscle to secure capital intensive contracts, could see its growth challenged if there is a lack of funding.

Downgrade to Fully Valued, with target price 0.23.