Hyflux

Annual report 2017 summary

Could 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 onwards carbon tax. Extremely unfavourable for energy generation companies. Unlikely to see increase in energy prices nearing election year.

Hyflux shows no intention of divesting Hyflux energy although it is loss making and believes in the long term. In my opinion, in the long term Hyflux could be financially deficient before it even reaches there. This is a very risky turnabout play with its high indebtness

Cyclical nature of EPC income

Don't foresee any new projects that are non capex intensive
Dangerous to continue to burn cash in a debt ridden and cash deficient company

MENA expansion / growth

Asset play and turnaround play story may not be playing out well
Assets cannot be swiftly divested to unlock cash flow. Although it is a good management decision to not divest at fire sale price, it may be a wait that is longer than anticipated

Extracted value through Hyfluxshop which prospects are largely unproven.

Increased financing costs showcasting company inability to service debt and short term cash flow. Redemption of perpetuals that dramatically decreasing shareholder equity. Good for the company but need a shrewd eye to pierce through the drastic changes in NAV and changes in balance sheet

Projected large increase in operating expense due to manpower intensive phase of IWPP and financial expense due to 8% perpetual and rising interest rate

There are much better investing opportunities elsewhere in the present negative mood. Cash should be better deployed in other investing avenues. I don't see Hyflux regaining profitable in the next 2-3 years

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