Hyflux

[donmihaihai]

Who and which are the parties at fault in this Hyflux fiasco? Think hard about this question, and do share your considered views here, and hopefully we can all draw some good conclusions which will serve us well to avoid similar major corporate/business failures and investment mistakes.

That's a good question.
I would start to say the investors ( myself ), management ..

Anyone else?

Join the retail investors group for updates on hyflux if u own perpetual securities , preference shares or hyflux stock
https://t.me/hyflux_retail

You might want to add PUB and EMA since these two entities( ultimately Singaporeans ) benefit the most from the the low water price and the low cost of power generation with over ample power generation capability.

I thought Tuaspring problem is relatively easy to solve if PUB and EMA can sit down with hyflux or buyer of Tuaspring to work out a deal. I can understand that it is a business decision but to be fair, if there is too much short change, the parties that derive the most benefit should give some leeway to the suffering party.

Why Tuaspring alone? Why not other?

If I understand the situation correctly, users(us mainly) of water and electricity benefited. Of course this thread is about vested interest.

If the industry or industries is unsustainable, then something need to be worked out. but bailing out a single entity because some agreed crap contract well that is different. Is now the time to work out something? 


If re-nego and too much benefits given to these players, how to users feel?

[sgdividends]

Who and which are the parties at fault in this Hyflux fiasco? Think hard about this question, and do share your considered views here, and hopefully we can all draw some good conclusions which will serve us well to avoid similar major corporate/business failures and investment mistakes.

That's a good question.
I would start to say the investors ( myself ), management ..

Anyone else?

Join the retail investors group for updates on hyflux if u own perpetual securities , preference shares or hyflux stock
https://t.me/hyflux_retail

You might want to add PUB and EMA since these two entities( ultimately Singaporeans ) benefit the most from the the low water price and the low cost of power generation with over ample power generation capability.

I thought Tuaspring problem is relatively easy to solve if PUB and EMA can sit down with hyflux or buyer of Tuaspring to work out a deal. I can understand that it is a business decision but to be fair, if there is too much short change, the parties that derive the most benefit should give some leeway to the suffering party.

Why Tuaspring alone? Why not other?

If I understand the situation correctly, users(us mainly) of water and electricity benefited. Of course this thread is about vested interest.

If the industry or industries is unsustainable, then something need to be worked out. but bailing out a single entity because some agreed crap contract well that is different. Is now the time to work out something? 


If re-nego and too much benefits given to these players, how to users feel?

The question is, did users (us)really benefit?

SP power cost price is regulated at the vesting price( buy from generators) , it's selling price to residential households is regulated at a tariff.

Simply put, cost price( paid to gencos) and selling price( residentials) is regulated.
It makes consistently 900 million sgd profits a year.

Is this really a case of users(Us) Vs vested interest in thread or something else ?

Water contract ,I hVent looked into as Olivia said the issue is with the electricity market supply.

Join the retail investors group for updates on hyflux if u own perpetual securities , preference shares or hyflux stock
https://t.me/hyflux_retail

[CY09]

Sgdividends is right in one aspect.

The price electricity is sold to the grid has no bearing to the electricity price households are paying. This segment contributes to 28% of the electricity demand. However, it is different in the corporate side. The electrical prices sold to companies/factories is based on market forces.

That said, I have highlighted in my previous post that Jurong Households are undergoing a liberalization of electricity prices. The pricing by Keppel and Sembcorp shows that Hyflux is unable to compete on pricing. At present, Singapore only consumes about 7,000 MW of electricity as compared to Genecos' capacity of 13,350 MW. Hence, it is unlikely Hyflux will get any business at all due to it being out-priced by larger competitors. Hyflux contributes to only 3% of Singapore's electricity supply.

https://www.businesstimes.com.sg/energy-...ercapacity

Digging deeper into the article, it shows that in 2016, the whole industry lost $357.1 million. Hyflux itself lost s$114 million on Tuas project in 2016, despite being a contributor of only 3% of Singapore's electricity supply.

[donmihaihai]

Who and which are the parties at fault in this Hyflux fiasco? Think hard about this question, and do share your considered views here, and hopefully we can all draw some good conclusions which will serve us well to avoid similar major corporate/business failures and investment mistakes.

That's a good question.
I would start to say the investors ( myself ), management ..

Anyone else?

Join the retail investors group for updates on hyflux if u own perpetual securities , preference shares or hyflux stock
https://t.me/hyflux_retail

You might want to add PUB and EMA since these two entities( ultimately Singaporeans ) benefit the most from the the low water price and the low cost of power generation with over ample power generation capability.

I thought Tuaspring problem is relatively easy to solve if PUB and EMA can sit down with hyflux or buyer of Tuaspring to work out a deal. I can understand that it is a business decision but to be fair, if there is too much short change, the parties that derive the most benefit should give some leeway to the suffering party.

Why Tuaspring alone? Why not other?

If I understand the situation correctly, users(us mainly) of water and electricity benefited. Of course this thread is about vested interest.

If the industry or industries is unsustainable, then something need to be worked out. but bailing out a single entity because some agreed crap contract well that is different. Is now the time to work out something? 


If re-nego and too much benefits given to these players, how to users feel?

The question is, did users (us)really benefit?

SP power  cost price is regulated at the vesting price( buy from generators) , it's selling price to residential households is regulated at a tariff.

Simply put, cost price( paid to gencos) and selling price( residentials) is regulated.
It makes consistently 900 million sgd profits a year.

Is this really a case of users(Us) Vs vested interest in thread or something else ?

Water contract ,I hVent looked into as Olivia said the issue is with the electricity market supply.

Join the retail investors group for updates on hyflux if u own perpetual securities , preference shares or hyflux stock
https://t.me/hyflux_retail

Users never benefit a single cent? Idk. 

Profit is relative. A single number mean nothing.

Idk whether it is a users vs vested interest issue. But sorry personally I would be disappointed if Hyflux is bailed out.

[yeokiwi]

Why Tuaspring alone? Why not other?

If I understand the situation correctly, users(us mainly) of water and electricity benefited. Of course this thread is about vested interest.

If the industry or industries is unsustainable, then something need to be worked out. but bailing out a single entity because some agreed crap contract well that is different. Is now the time to work out something? 


If re-nego and too much benefits given to these players, how to users feel?

Since this is hyflux thread, therefore Tuaspring is the focus??
But you are right, power generation margin problem is faced by all except one. It is either saved all or not.

Tuaspring is sort of an exception since it is both a power generation plant and a desalination plant.

This case reminded me of the SengKang Kopitiam Square. Kopitiam put in a bid of $500,100 per month rental and won the bid to build hawker centre in 2009
HDB did a nice job in maximizing the returns for Singaporeans.
But, in the end, the residents were faced with awful food/groceries at awful prices and subsequently, many stalls were left vacant.

So who won?? HDB? Kopitiam? Residents? Singaporeans?

[specuvestor]

^^ I think Yeokiwi’s rhetorical question on the case of Sengkang Kopitiam Square is in a nutshell the problem of capitalism since the industrial revolution.

It is not something new that policy making is not just about market forces. And when entities that are strategic is in question, moral hazard comes in. Reality is policy makers have to make a judgement call when to interfere, and made complicated by various vested interest. It’s not a simple binary decision.

So main question is whether TuasSpring is strategic and if so if this asset can be extracted out so that the strategic interest can be ringfenced. That’s also the approach of our transport system. Operator model?

[tonylim]

Economies of scale is of ulmost important for many businesses to compete and stay relevant . Being a small player , can TS compete with the bigger players ?

[cfa]

If Hyflux is unable to service its debts , should just let the creditors decide the future of Hyflux. Some other capable players can pick up the assets and make it more viable. Why should it be bailed out for own mismanagement at the expense of tax payers or other resources ?

[dydx]

I have 2 points to share :

1. If Hyflux had remained just a specialist turnkey EPC contractor - i.e. do the design/engineering work and build to the required specs, and after that get paid for most of the agreed contract value of the individual projects - for water projects, the risk profile of the business would be much lower, the management of the business less complex, and the capital and external borrowings required much smaller. This point actually concerns the CEO Olivia Lum's vision, business competence/judgement, and personal ego.

2. If Hyflux had not borrowed so much - including taking up excess subscriptions of its perp and other debt market issues - and from fancy financial instruments like preps, pref share, bond/note issues not linked to underlying projects, etc., and as a result created for itself a highly complex and huge senior-plus-junior debts funding structure, the current financial restructuring exercise would not be necessary at all. This point actually concerns the CFO Lim Suat Wah (joined Jan2011) who, based on the various fund-raising exercises undertaken by Hyflux since 2011, IMHO has not displayed the necessary financial prudence in managing the financial affairs of the Hyflux Group in the last few years. In this regard, the IDs are also responsible.

[donmihaihai]

^^ I think Yeokiwi’s rhetorical question on the case of Sengkang Kopitiam Square is in a nutshell the problem of capitalism since the industrial revolution.

But there is some social involved. When hdb got it wrong, you know what Singaporean will do.. I think current issue is a little mixed too. If pricing got wrong or when capacities is tight resulted in high price. 

Water and electrically generators are big scale. Each addition move the capacity up by some. When few players increased capacities at the same time. They know excess capacities will resulted in. Price to pay for future profit. Not sure if this is the case now but would surprise if it is not.

Not everything work perfectly on the first try. Re-do. 2nd and 3rd try might be needed for some.