Hyflux

[brattzz]

$270m at 396 megawatts (MW)/hr capacity, at 26cts/kWh current rate May 2022,

It's gonna be profitable now!!

[specuvestor]

$270m CASH I presume assuming debt and EXCLUDING the desalination plant

Wonder how in midst of restructuring PUB can strip it out and it would be negative value only if stripped out and at what period? Was it nationalisation for national interest without open tender? Obviously the other bidders for the whole package thinks there's some value there but we'll never know since it wasn't consummated.

Off the top of my head, Hyflux won this tender by ingeniously (now it can mean either way) packaging the desalination plant with power plant, which the latter was making good money back then before the liberalisation of electricity. So in a sense the liberalisation killed hyflux and destroyed the maths but I'm not sure how long was the contract to supply water to PUB at a loss which will determine how long the red ink there will last.

https://www.straitstimes.com/singapore/p...by-april-5

With most of us suffering from high (and higher) electricity rates, a buyer for TS is still only willing to pay 270mil, far cry from its billion dollar valuation assigned to/bought off/signed off by all the accredited parties previously.

YTL Power acquires Hyflux's Tuaspring power station for $270m in cash

In a statement on Wednesday (June 1), the international utility group said its wholly owned subsidiary, YTL PowerSeraya, had completed the purchase at $270 million in cash.

https://www.straitstimes.com/singapore/y...0m-in-cash

For this power station alone, a billion dollars ? Sure way to go bankrupt, no?

[CY09]

I dont think it was the liberalization that killed Hyflux. What killed was the overbuilding of power plants in 2010-2014.

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

Since the article in may 2017, the peak consumption of electricity has not increased much and is at about 7,050 MWH. In a sense the situation is still as bad as previous where there is large overcapacity. Hence the $270 million seems to be fair value. Why has $/kwh increased is likely due to the inputs cost increasing. If Singapore had not commissioned new power plants during the above period, the market will be about balance. Why EMA decided to approve an extra 2,000 MW in capacity is in question, but my suspicion is that it was due to population projection in 2008-2010 that did not materialise.

https://en.wikipedia.org/wiki/List_of_po..._Singapore

[Behappyalways]

Honestly I am more interested if the authority has the political will to go after the management. The loss to shareholders and bond holders are permanent and no matter how much Hyflux are sold, the shareholders and bond holders will get back little...

See my August 14 2015....onwards
http://investideas.net/forum/viewtopic.p...&start=160

https://www.theedgesingapore.com/hyflux-...op-listing

https://www.theedgesingapore.com/olivia-...pecies-sic

http://investideas.net/forum/viewtopic.p...&start=180

For instance, it distributed shares in its smaller consumer water business, HyfluxShop, to shareholders via an unusual dividend in specie months before it filed for bankruptcy. Hyflux boss Olivia Lum then made a general offer to buy back these shares from investors.

Questions have been raised about whether this was a pre-emptive move to ring-fence HyfluxShop from the troubled mother ship in the event creditors came calling.

https://www.businesstimes.com.sg/compani...-directors
http://investideas.net/forum/viewtopic.p...&start=220

As my posting shows, in 2015, one can have a feel that the company is having problems...so the insiders probably have a better feel of the company status....so is it ring-fence.....???
Hope the authority does a proper closing of this case so that it would not be repeated.....

[¯|_(ツ)_/¯]

@behappyalways - the ring fence is clear and Oliver is the clear winner from the exercise.  after all, she is the founder of hyflux and a little bit of hyflux "legacy" kept under her wings - should be ok bar.

Simply put, she is also a victim of the whole saga.  Granted, she is over confident and too aggressive in the mega "power subsidies water" project.  She should be accountable for her mistake - which she did - to certain extend. 

In the technology world, innovation is very important. She tried her best and unfortunately, it not good enough and she is licking her wounds too.

Nonetheless, a lot of investors trusted her and go in with their hard earn $$$. What loss is already loss. 

Moving forward, what is the learning lessons? 
What could we do to avoid another lemon?
If it's is unavoidable (in the sense that noboddy knows), then how should we limit our lost?

It's true that a lot of valuebuddies invested heavily in Oliver.
I just hope that they picked up themselves and focus on the learning to be better in picking stocks and controlling risks.

Hope that with YTL, everything will be getting better.



Watch Francis Yeoh of YTL:


Gratitude. 

[CY09]

Lesson learnt is that balance sheet in many Singapore companies are priced optimistically. This is why Hyflux listed comparable such as China Everbright and SIIC are valued at a low book value because investors are worried their water projects have baked in too optimistic forward looking projections.

What killed Hyflux was its continued projection that Electricity is $200/KWH and they will be able to earn a decent margin from it. Unfortunately, upon completion of Tuaspring, the numbers in Excel did not match reality.

If possible, I would want Singapore regulators to stipulate for companies such as REITs, utility projects, shipbuilding, rigs, leasing vessels if they are projecting their asset's value in balance sheet based on future value. They are to publish their forecasted variable inputs in the annexes of annual report so investors can parse through the value of each asset to determine. CapitaLand has done it for its properties and I dont think it is difficult for other listed companies to do so.

[LionFlyer]

Simply put, she is also a victim of the whole saga.  Granted, she is over confident and too aggressive in the mega "power subsidies water" project.  She should be accountable for her mistake - which she did - to certain extend. 

She/Hyflux succeeded in the early phases of stages by taking "risks". Whether was it taking on the Bedok NEWater plant project or Tuas desalination plant, she took the risks and won big.

It would be an interesting business school study to do an interview with her.

Did her past success conditioned her to accept that such risks can be overcome? Was it hubris? Did she surround herself with yes men who enabled her risk taking? Why did the board not stop her? They said it is easy to see with the benefit of hindsight, but in the case of Hyflux, all the warning signs were there.

[specuvestor]

Temasek was shredding power stations to foreigners at a fantastic price while the tariff system was in place. When oil / natural gas prices collapsed post 2009 our tariff stayed relatively high. At the peak I recall Singapore alone contributed to Huaneng power’s ⅓ profit

https://www.reuters.com/article/us-temas...4220080314

Singapore is always oversupplied to have a structurally headroom and strategically correct. Once power was deregulated the profits plunged. Disclaimer: I’m not sure how this headroom is being managed now under a deregulated regime. If it is purely profit maximisation this would be expected: https://www.latimes.com/environment/stor...me-answers

https://www.spgroup.com.sg/wcm/connect/s...OD=AJPERES

I dont think it was the liberalization that killed Hyflux. What killed was the overbuilding of power plants in 2010-2014.

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

Since the article in may 2017, the peak consumption of electricity has not increased much and is at about 7,050 MWH. In a sense the situation is still as bad as previous where there is large overcapacity. Hence the $270 million seems to be fair value. Why has $/kwh increased is likely due to the inputs cost increasing. If Singapore had not commissioned new power plants during the above period, the market will be about balance. Why EMA decided to approve an extra 2,000 MW in capacity is in question, but my suspicion is that it was due to population projection in 2008-2010 that did not materialise.

https://en.wikipedia.org/wiki/List_of_po..._Singapore

[Behappyalways]

Hyflux's former CEO, CFO and independent directors charged with offences under SFA and CA
https://www.theedgesingapore.com/news/co...sfa-and-ca

[CY09]

If she is successfully convicted for her CAD charges, wont it mean that investors subscrbing to the perps suffered a wrongful loss?

Hence besides being jailed, that meant the CFO and her would be liable to paying back close to a few hundred million