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Showing posts with the label Hyflux

Distressed utilities - a continuation

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White knights and damsel in distress.

In the depths of the doom and gloom originated by the US and China stock correction, there is a silver lining largely unnoticed by the market. 
A CONSORTIUM comprising two major Indonesian groups - conglomerate Salim Group and energy giant Medco Group - has agreed to give Hyflux a S$400 million equity injection, in exchange for a 60 per cent stake in the water treatment firm once it has settled all its debts. The consortium, SM Investments, will also grant Hyflux a shareholder's loan of S$130 million and a debtor-in-possession loan of S$30 million to help finance it through the restructuring. With this offer on the table, it falls to Hyflux to negotiate terms of a debt restructuring with each of its creditor groups, which could include debt-for-equity swaps.
The best case scenario turned out to be the outcome of this case although the White knight I envisioned turned out to be completely different entities! The turnabout play thesis is realize…

Obligatory post about Hyflux

http://financials.morningstar.com/ratios/r.html?t=600&region=sgp&culture=en-US
https://www.gurufocus.com/news/155687/peter-lynch--a-simple-way-to-benefit-from-utility-investmentsBetter late than never!
Hyflux has been a distressed asset play I have been holding since April 2017. A boring and unexciting business turned out to be headline worthy when Olivia lum initiated a trading suspension in the exchange,  suspension of the dividend, and the restructuring of the debt position of Hyflux with the courts .This is followed by the leaving of the COO which is long overdue considering the heavy operational blunders . Hyflux is working to reach an agreement to arrange a haircut discount on its liabilities and every Tom dick and harry is suddenly an expert on Hyflux, the same as bitcoin a few months ago. Even the housewives are talking about it as some of its perpetual are issued to the retail market. I take this as a symptom that this stock has reaches the point of maximum pessimism…

Hyflux

Annual report 2017 summaryCould be Diwosifying in energy and environmental services which is out of its circle of competence. Very hard to gauge. Not focused on core water treatment business and lowering costs. Great effort in cleaning up balance sheet of perpetuals but still drawing down from project loans and not profitable Hyflux trying to grow it's way out of insolvency and indebtness. I don't see it happening for this company in the next 2-3 years unless it can sell of TianJin Dagang and Tuaspring to generate free cash flow, and reduce its capex. Price spike due to unverifiable factors. May be a good chance to divest most of my miniature position.Energy market play
Expected to be losing money continually for 2018. Even if the energy market recovers, I don't expect Hyflux energy to be profitable due to the fierce competition of the energy industry in Singapore. I don't see a reasonable chance this company will regain profitability in the next 2-3 years. 2019 onward…

Distressed utilities

https://www.businesstimes.com.sg/companies-markets/perpetual-securities-wont-be-called-until-tuaspring-is-divested-hyfluxHYFLUX will not redeem its retail perpetual securities until the divestment of Tuaspring is completed, it said on Tuesday.A S$400 million tranche of Hyflux's perps reach their first call date on April 25. Hyflux has the right but not the obligation to redeem its perps at the first call date. The coupon yield on these perps will step up from 6 per cent to 8 per cent per annum until they are redeemed.Hyflux aimed to partially divest up to 70 per cent of Tuaspring water desalination and power plant last year, but has not. Tuaspring is held on its books at a value of S$1.3 billion.Since October 2016, Hyflux has also been trying to sell the Tianjin Dagang desalination plant in China, which had a book value of S$150 million.Ms Lum said that she is still looking for a buyer, although the asset has been brought back into Hyflux's balance sheet as it no longer meets …

Hyflux - Improving Fundamentals?

Improvements
1) Revision of electricity fees from January 2018, the government justify price increase due to increase in energy prices, may result in better profit margins / reduced losses from Tuaspring

2) Revision of water price upwards, the government justify price increase due to lack of revision of prices and need to readjust it to reflect market fundamentals. May result in better profit margin of Hyflux Operation and Maintenance business

3) Liquidation of fixed / non current assets to current assets to improve cash flow. Cash flow used partially to pay down preference shares / debt.

4) Eventual partial divesting of Tuaspring to unlock cash flow and reduce its exposure to the energy market, which is not within its circle of competence



5) Hyflux group will refocus on its own core business (Municipal and O&M)

Free scrip dividend (at no cost)of Hyfluxshop Shares as it is going to be listed eventually. Proposed Distribution being approved by Shareholders at the Extraordinary Gen…

Portfolio 2017

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Stock NameModeQtyAvg Cost Price
Total CostPercentage ASCENDAS-ITRUSTCSH25001.13ASCENDAS-ITRUST2,812.5020.5554540471ASCENDAS REITCSH10002.25ASCENDAS REIT2,250.0016.4443632377HYFLUXCSH40000.57HYFLUX2,260.0016.5174492965RAFFLES MEDICALCSH20001.31RAFFLES MEDICAL2,610.0019.0754613557SINGTELCSH10003.75