SINGAPORE, Feb 23 (Reuters) - CIMB Research downgraded Singapore water treatment firm Hyflux Ltd to trading sell from neutral and cut its target price to S$1.23 from S$1.28.
By 0246 GMT, shares of Hyflux were 3.8 percent lower at S$1.52, but have gained 26 percent since the start of the year.
Hyflux said on Wednesday its net profit for 2011 fell 40 percent to S$53 million, hurt by lower sales as its projects in the Middle East neared completion and the Arab Spring riots affected new contracts.
Although Hyflux's core profit beat CIMB's forecasts, the brokerage downgraded the stock as it said its outlook for the business remains challenging without new project wins.
CIMB said the company's dependence on a single major project-- its Tuas desalination plant, could also dent investors' confidence.
"We find it hard to remain bullish as volatile earnings and major capex could add to selling pressure," the brokerage said. (Reporting by Charmian Kok; Editing by Anshuman Daga)