Hyflux

[BRT]

going by your train of thought, it's certainly worth less but not worthless

[kichialo]

 I cant understand who will pay it for book value. Even if Temasek wants to privatise it, the gahmen will also be worried about opposition using it as a good reason to shoot them for using taxpayers money to bail out a company with terrible economics.

On the contrary, this is the last thing the govt is worried about. It has no impact on the electorate and the electorate does not care one bit either way.

[weijian]

How does companies account for their order books in the financial statement ?

Hyflux has about 2.6 billion of order book latest.

And how fluffy is order book ? How much commitment must be made by the customer before a company can declare it in their order book? Is there a standard definition ?

I believe order book play no part in the financial statement. Until this order book's numbers are translated into revenue (in which under the accounting rules, there are specific definitions on how to recognize revenue), the order book doesn't affect the current FS.

That said, i believe the general rule of thumb for companies to include them into the order book is to have signed a legal-binding contract. Again, the amount of commitment to be made by customer to the supplier varies after signing the contract, so that's not the key to declaring it to the order book.

That said, I can recall from a recent incident about order book about Swiber. In essence, Swiber included a LOI (letter of intent) into its order book. They have since been reprimanded by SGX for "failing to be "fair and balanced"". The directors were last called up by CAD about 1year ago but i think there is no follow up so far.

http://www.straitstimes.com/business/com...ting-rules

[sgdividends]

Thanks Weijian for the explanation . The order book looks good to me for a saviour to want to inject funds as what hyflux is suggesting . Just wondering about the fluffiness..

[CY09]

In the power market, Singapore actually faces an oversupply of electricity- more electricity is generated than our island's demand. Hopefully, with the liberalization of the electrical market, there will be more demand due to the cheaper cost post de regulation.

However from then to now, Hyflux is likely to continue struggling. This brings to the questions if its Tuas Asset really "lives up" to its stated value. In my opinion, the answer is no and Hyflux definitely has to take an impairment. This may result in Hyflux being in negative net equity for ordinary shareholders.

Orderbook is one thing, the margin earned from the orderbook is another. Yongnam is a perfect example of a company with a large orderbook but is always making losses from its orderbook.

[yeokiwi]

In the power market, Singapore actually faces an oversupply of electricity- more electricity is generated than our island's demand. Hopefully, with the liberalization of the electrical market, there will be more demand due to the cheaper cost post de regulation.

However from then to now, Hyflux is likely to continue struggling. This brings to the questions if its Tuas Asset really "lives up" to its stated value. In my opinion, the answer is no and Hyflux definitely has to take an impairment. This may result in Hyflux being in negative net equity for ordinary shareholders.

Orderbook is one thing, the margin earned from the orderbook is another. Yongnam is a perfect example of a company with a large orderbook but is always making losses from its orderbook.

But, the electricity price is regulated by EMA.
The excess capacity is more liked a design requirement by EMA to ensure adequate supply of electricity for Singapore and it cannot be a reason for them to price the electricity below cost recovery.

So, EMA has the responsibility to price the electricity correctly so that the power companies can recover the cost of electricity production with some profits.

http://singaporepowerdesk.com/loss-makin...revisited/

[specuvestor]

^^ yes our electricity capacity is designed with headroom to minimise blackouts and future proofing. It is strategic. Hence it is moot to discuss overcapacity as the driver for our electricity market as it’s a given

IPP on the other hand is profit driven not national interest driven (think SMRT) so that’s where EMA comes in to set a price that’s adequate return for IPP.

Common misconception including the link is that the electricity cost is Brent driven. It is actually more NG driven
https://www.indexmundi.com/commodities/?...rice-ratio

For Hyflux IIRC their power generation asset is supposed to lose money but make money with desalination plant as a package.

[sgdividends]

Since price is set by EMA, the only thing such companies can do is increase their efficiency to lower their cost.

Does anyone know if the others are losing money like hyflux ?

Because if it's only specific to hyflux, I was thinking if a white knight ( supposedly more efficient one ) could take over hyflux to realise the order book of 2.6 billion.

Don't know why Olivia stepped down from ST...not sure if good or bad...can be either side

[yeokiwi]

Since price is set by EMA, the only thing such companies can do is increase their efficiency to lower their cost.

Does anyone know if the others are losing money like hyflux ?

Because if it's only specific to hyflux, I was thinking if a white knight ( supposedly more efficient one ) could take over hyflux to realise the order book of 2.6 billion.

Don't know why Olivia stepped down from ST...not sure if good or bad...can be either side

I am not a power expert but I think currently, none of the gencos is able to recover the fixed cost.

http://singaporepowerdesk.com/loss-makin...old-steps/


“Market participants are likely to enter financial distress and require restructuring of their balance sheets.”
(Senoko Energy)

“It is quite apparent that the current regime in Singapore makes it impossible for the generators to be confident of a reasonable mid to long term return on any new investment.”
(YTL PowerSeraya)

“Hence, it can be seen in that the […] regime has effectively prevented generation companies from recovering their costs through the market.”
(Tuas Power)

[sgdividends]

Thanks yeokiwi.

I'm wondering, when they allowed hyflux to sell their retail bonds to the general public ( not all bonds can be retail and they are selected on some criteria )and most of the generators say they can't recover cost , probably due to the price fixed by EMA , and if hyflux were to go under...and many moms and pops with their retirement funds decimated.what a big hoo ha it will be since the outcome is largely blamed at the ones who fixed the prices and the ones who allowed it to be sold...

Gosh. What's happening !!