Singapore Stock Alert : Hyflux
I thought I better point out that Hyflux has taken a dip recently with their share price approaching their 5 year low back in Dec 2011.
Share price is down 12% year to date and it fell 10% in a month since their dividend payment in August.
6 analysts ratings – 3 Hold/Neutral and 3 Sell/Underweight
Not much news I see, so if anyone has anything to share, please do so.
Their last bond issue was in July for another perpetual issue and I did not say many nice things about them, unfortunately. https://tradehaven.net/market/sgd-new-issue-review-hyflux-perp-nc2-high-4/
Their total debt as of Jun had risen again to $ 1.149 bio and their current market cap of SGD 844 mio (vs 981 mio back in July when I last wrote about them) looks a little weak to support such gearing.
Like I mentioned before in my review in July, “I have a strange feeling, the public perception that Hyflux is partially state owned or will be state owned, if need arises.” But still I will not stick my neck out for them.
Indicative prices of Hyflux bonds.
Looking at the yields, I think they have not come to terms with the stock price.
Good luck !
Hi,
This may be a reason. From Kim Eng Research, 22 September.
Hyflux Ltd – Changi NEWater slipped out of its hands (HOLD, TP SGD1.07, HYF SP, Industrials)
– Maintain HOLD & SGD1.07 TP (25x FY16E P/E). Prefer HanKore and SIIC for water-sector exposure.
– Lost bid for Changi NEWater project. Consortium formed by Beijing Enterprises Water and United Engineers won it.
Yes.
Check out their R&D numbers. http://52.77.202.71/market/sgd-new-issue-review-hyflux-perp-nc2-high-4/
Hyflux has been underperforming since it last won Tuas 2 desalination in Singapore. It is very worrying to note that it has not won anything substantial anywhere in the world since it’s last “oversea” project in Salalah, Oman. Projects in MENA are always large and contribute well to it’s top and bottom. Failure to win in this territory is now reflected badly on it’s financials.
I attribute this poor performance to the quality of the current board of directors as well as it’s management team. None of it’s senior executives has got a proven track record in water business. Looking at Mr Oh Jin Teck, who was the EVP managing it’s China market, Hyflux had not won anything substantial during his three year tenure there. It’s current senior executive covering MENA too has no proven track record for business development work. This is very alarming too and a major source of concern!
Notwithstanding it’s historical performance, the board too seems to lose it’s touch too. I am not sure they know how to turn things around! With its share price falling at an alarming rate, the directors and senior executives need to act swiftly and effectively.
Hi John,
You left out the most important bit. Hyflux has not been spending on their R&D in recent years and their technology is behind the curve of newer companies. Some numbers here – http://52.77.202.71/market/sgd-new-issue-review-hyflux-perp-nc2-high-4/
The big risks in doing business in the MENA and other jurisdictions is that the assets belong to the respective governments although Hyflux foots the bill first and is then allowed to reap the returns via “concessions” during the agreed period of operation. Mentioned here – http://52.77.202.71/market/sgd-new-issue-review-hyflux-subordinated-perpetual-nc3-high-5/
If the governments decide to renege on the deal, there is little recourse, as far as I can see.
Just my 2 cents worth.