(17-02-2019, 09:38 AM)CY09 Wrote: [ -> ]What I am more interested is not how much Tuaspring is bleeding in P&L, but how much cashflow Tuaspring is generating annually, after nett off its operations cash outflow, during the years of low USEP.
This will allow noteholders, Perpetuals and Preference shareholders to guage how much value Tuaspring is worth. After all, Tuaspring contributes to a significant portion of the asset base. In my opinion, it is definitely not worth so low like Sembcorp's bid of $500 million bid after present valuing the expected cashflow streams.
U can find the info somewhat from Hyflux AR17, Pg 138 Note 32 under Discontinued Operations
2017 2016
Results of TS
External Revenue 175mio 156mio
External Expenses -229mio -238mio
Finance Cost payable to Company -47mio -60mio
Operating results -101mio -142mio
U cannot isolate revenues from water vs electricity as they are lumped together, but OL mentioned that 90% revenue is from electricity.
U cannot isolate costs of LNG vs interests to Maybank vs fixed costs from external expenses
Apparently Hyflux also extended a shareholder loan to Tuaspring and the finance costs is isolated.
Further info on USEP can be obtained from EMA
https://www.ema.gov.sg/cmsmedia/Publicat.../35RSU.pdf
In short average USEP in 2017 is 81; in 2016 is 63. In 2018, the average is 110.
More information can also be gathered from OL's affidavit on 14Jun2018 (Pg17) where she revealed that spark spreads (i.e. revenue from electricity - cost of LNG) has turned +ve since Feb18 (average USEP in Feb18 is 99.5).
Going fwd, 2 things should happen once SM group takes over
1. Refinance with Maybank to lower interests
2. Once the take-or-pay LNG contracts expire (not sure when exactly this happens - Hyflux refuses to answer), SM will be able to use the piped gas from Indonesia to Singapore (which they own) for both TS and PacLight. Current LNG prices is reportedly 3x the price of piped gas.
Some thoughts:
1. Spark spreads turn +ve for USEP >99.5
2. Breakeven for TS on a cash basis should be ~130 for USEP. This is just a guestimate as while revenues should be correlated to USEP, the relationship need not be linear.
3. Interests savings and piped gas usage from SM eventually should bring even further savings
4. It is also clear why SM will be interested in TS esp when they also own PacLight+piped gas, and why the advisors recommend SM as the synergies are significant.
Of cos, if USEP falls back to 60, then its square one again.