Hyflux

[d.o.g.]

And then Hyflux starts divident on the 9th years. Do PS Holders still be entitled and in full ?

In theory, yes. If Hyflux suspends the preferred dividend, the dividends continue to accrue, such that in future, if it wants to resume the preferred dividend, it has to make up all the skipped dividends as well.

As you might imagine, this can become a huge burden. The longer Hyflux suspends the preferred dividend, the more expensive it becomes to resume the preferred dividend. In all likelihood, if the preferred dividend is suspended, it means Hyflux is in big trouble and is unlikely to ever resume the preferred dividend. In other words, the fact that the preferred dividend is cumulative says more about the financial weakness of Hyflux than about the safety of the preferred dividend.

[Temperament]

That's why i am "skeptical" about "NCPS & CPS." Besides if company is doing very well yearly, which share holder benefited more? i think i rather "bet" on the common shares; dividends and more important i have the choice to cash out in a Bull Market. Maybe 1.5 -2.5 capital gain. i believe in keeping my investments(capital) as "alive" as possible(as many choices as possible).

[FFNow]

Latest report by DBS Vickers - http://www.remisiers.org/cms_images/rese...12_Buy.pdf It says sell-down has been overdone.

[FFNow]

Hyflux is up due to very high vol now. 1,198,000 shares we bought during pre-open. At 10.45am, 453,000 shares were bought. Guess company is doing a buy-back or hedge funds are getting in.

[chimpy]

Very strong buyback activity over the past few months. Management bought back about ~1.5% since. Entitled to buy up to 10%. Still trading near -0.75 SD below historical average Forward P/E. Hoping for a nice correction. Ongoing lawsuit in China will be an overhang on stock.

[Eastman1448]

And then Hyflux starts divident on the 9th years. Do PS Holders still be entitled and in full ?

In theory, yes. If Hyflux suspends the preferred dividend, the dividends continue to accrue, such that in future, if it wants to resume the preferred dividend, it has to make up all the skipped dividends as well.

As you might imagine, this can become a huge burden. The longer Hyflux suspends the preferred dividend, the more expensive it becomes to resume the preferred dividend. In all likelihood, if the preferred dividend is suspended, it means Hyflux is in big trouble and is unlikely to ever resume the preferred dividend. In other words, the fact that the preferred dividend is cumulative says more about the financial weakness of Hyflux than about the safety of the preferred dividend.

With the current price of $105.7, it still yields a dividend of 5.7%, any downside?

[greengiraffe]

And then Hyflux starts divident on the 9th years. Do PS Holders still be entitled and in full ?

In theory, yes. If Hyflux suspends the preferred dividend, the dividends continue to accrue, such that in future, if it wants to resume the preferred dividend, it has to make up all the skipped dividends as well.

As you might imagine, this can become a huge burden. The longer Hyflux suspends the preferred dividend, the more expensive it becomes to resume the preferred dividend. In all likelihood, if the preferred dividend is suspended, it means Hyflux is in big trouble and is unlikely to ever resume the preferred dividend. In other words, the fact that the preferred dividend is cumulative says more about the financial weakness of Hyflux than about the safety of the preferred dividend.

With the current price of $105.7, it still yields a dividend of 5.7%, any downside?

In order to evaluate the pref, its better to analyse the cash flow of the entire company. Once you can see the cashflow of Hyflux, perhaps you will have a better answer if it is worth the risks.

There are many companies that offer 5.7% yield with the participation of earnings growth should the company do well. One should only buy preference shares or fixed income alternative of strong cash generating companies.

[money]

And then Hyflux starts divident on the 9th years. Do PS Holders still be entitled and in full ?

...

With the current price of $105.7, it still yields a dividend of 5.7%, any downside?

A few months ago, in an interview with warren buffett, he mentioned that all bonds should come with a warning label. Preference shares rank below bonds, perhaps we should be really careful with fixed income securities.

I guess we cant be too wrong if we listen to the advice of buffett.

[itskenneth]

NEWS RELEASE

HYFLUX ACHIEVES HIGHEST EVER ORDER BOOK OF S$2.9 BILLION WITH
GROWING RECURRING INCOME BASE

- Expanding O&M portfolio pushes O&M order book to S$1.9 billion, an increase of almost 100% year-on-year

- Tuaspring Desalination Plant to start operating in second half

- 15% rise in PATMI to S$61.0 million, revenue up 42%
Singapore, 21 February 2013 – Hyflux Ltd (Hyflux or the Group) has over the years been working on growing predictable and recurring revenues. Today, the Group is seeing rising recurring income streams from its operations and maintenance (O&M) business, asset returns, membrane sales and other services. The almost 100% jump in its O&M order book from a year ago is a reflection of part of this concerted initiative.

More info http://hyflux.listedcompany.com/newsroom...16A5.1.pdf

The profit growth was achieved on the back of a 42%
increase in total revenue from S$482.0 million in FY2011 to S$682.4 million in FY2012.

[Stockerman]

Can anyone help to explain why would the commencement of Tuaspring desal plant help with bottomline?
I would think that the commencement of Tuaspring desal plant will NOT be EPS-accretive!


Isn't selling desalinated water (1st year price) at 45 cents per m3 a losing business? Or is PUB getting too good a deal?

Btw, PUB suppplies water to Singapore at about $2 per m3. Can Hyflux sustain at 45 cents per m3?

http://www.pub.gov.sg/general/Pages/Wate...Print2=yes

******

http://www.globalwaterintel.com/archive/...posed.html

The financing package for the Tuaspring desal and power plant in Singapore has left Hyflux’s balance sheet dangerously exposed. How much further can the shares fall?[/b]

Hyflux’s failure to secure project finance for the power element of its new 318,500m3/d & 411MW power and water project in Singapore means that its balance sheet is now dangerously exposed to a single asset.


The company’s finance costs spiralled by 38% over the first nine months of this year as it scrambled to raise cash to finance the project, which will be the largest desalination plant in Singapore when it comes online in 2013.

With the exception of a S$150 million (US$118 million) project loan negotiated to part-fund the desalination element, the S$890 million (US$727 million) project will be financed entirely on-balance sheet, marking a dramatic change from Hyflux’s previous ‘asset-light’ strategy.

This may not have seemed such an issue when the company’s market cap measured S$1.8 billion (US$1.4 billion) back in July, but since then, the shares have drastically underperformed the Straits Times Index, wiping a third off the company’s value (see chart below).

A tight global project finance market meant that Hyflux had little choice but to take on corporate debt in order to keep to the project timetable. “This financing strategy allows us to speed up the process of delivery,” Hyflux CFO Cho Wee Peng told GWI.

The structure of the project may have compounded the difficulty of raising funds off-balance sheet. Hyflux won the tender for the 318,500m3/d project in March this year with a strikingly low first-year water price of S$0.45/m3 (US$0.35/m3) and a plan to build a 411MW captive power plant to serve the facility with up to 300MW extra capacity to sell power to the grid.

The desal component of the project is covered by a 25-year water purchase agreement with Singapore water utility PUB, which was signed in April. However, no power purchase agreement is possible in Singapore’s liberalised wholesale electricity market. Hyflux is betting that it can supply power to the grid at competitive rates, but with no track record in the sector and no heavyweight partner, lenders appear to have been reluctant to take exposure to these risks.

They seem happy enough to lend to the company itself. Having amended its articles of association in the spring, Hyflux raised S$400 million (US$314 million) in April through a highly successful issue of 6% preference shares. When it became clear that the project finance market would not be receptive to funding more than S$150 million of the total project cost, Hyflux raised the ceiling of its debt issuance programme from S$300 million to S$800 million in mid-July, and has since plundered the medium-term note market for a total of S$265 million (US$207 million) (see table). “The primary purpose of the MTNs and preference shares is to finance the new project,” Cho confirmed to GWI. The company will draw on internal resources to fund the remainder of the Tuaspring project. “Hyflux has a strong balance sheet at the moment, and we do not have any other big investment needs in the coming one to two years,” Cho told GWI. In its results for the most recent quarter, Hyflux announced cash holdings of S$768 million (US$600 million), giving the group a relatively low net gearing ratio of 0.14.

The Tuaspring project broke ground in July and is expected to be completed in two years. Hyflux may be hoping for a speedy refinancing or an equity sale once the project is up and running, as it did for Singapore’s other desalination plant, SingSpring.

With the Tuaspring win and progress in China, the company’s business has tilted back towards Asia from the Middle East and North Africa (MENA) region over the last nine months. In the year to September, S$92.7 million (US$71.7 million) or 33% of total revenue came from China, up from 23% in the same period last year thanks to capacity extensions at existing facilities and three new water projects in Hechuan Industrial Park in Chongqing.

MENA revenues, on the other hand, fell from S$269.9 million (US$208.9 million) to S$112.8 million (US$87.3 million) over the same period, down from 71% to 39% of total group revenues. EPC revenues from the region are drying up, too, as the RO desal plant in Tlemcen, Algeria, is now finished and other RO projects in Algeria and Oman are nearing completion.