Hyflux

Yet in the past 12 years or so Hyflux has moved from 70cts or so to $2.50 and now $0.50

Point is it can take a long time for reality to bite. My dad used to work for a very successful import export business. After the Patriarch died the children took over and practically didn't import anything but just sell whatever is in the warehouse and pocketed the money. They continued doing this for the next DECADE until all the goods were sold and the company closed. It taught me that crap can last for a very long time

So nowadays I've learnt not to be excited about crap stocks that made no sense yet double or 10X or more. Seen that too many times and learnt to walk away as I'm not good enough to play the game.

On the other hand through this 12 years cycle we can also see how catalysts propelled Hyflux, from Singapore groomed blue-eye-boy (or gal) to Chinese business to Middle East etc. Catalysts makes a difference. I agree with Seeking Alpha that Hyflux is not a fraudulent company but one with unsustainable biz model. So these type of stocks still worth looking out for catalysts, unlike crap stocks.

BTW, SGD 175 m Perp (4.8%) issued on 29 July 2014 were fully redeemed on 29 July 2016.

But.........................................

Dividend on CPS + Perps:
Dividend on CPS = SGD 400 m x 6% = 24m
Dividend on Perp (issued on 23-Jan-2014) = SGD 300 m x 5.75% = 17.25 m
Dividend on Perp (issued on 27-May-2016) = SGD 500 m x 6% = 30 m
Sub –total ~ SGD 71 m per annum

Interest costs on debts (loans and borrowings) :
Loans and borrowings as at 30th June 2016 = SGD 1,341 m
Assumed average interest rate of 3%
ðInterest costs = SGD 1,341 m x 3% = SGD 40 m per annum
 
Annual “servicing costs” of SGD 111 m to sustain current level of debts + CPS + Perps !!!!!!!
 
Sustainable ? Am I missing something?
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Below recent report in Q2. Interestingly i did not see the 400M CPS. Wonder why.

----------------------------------
Perpetual capital securities
Amount
S$’000
At 1 Apr 2016 469,096
Add: perpetual capital securities issued in May 2016 494,885
At 30 Jun 2016 963,981
As at 30 Jun 2015, perpetual capital securities comprised:
 $300 mil 5.75% per annum, issued on 23 Jan 2014; and
 $175 mil 4.80% per annum, issued on 29 Jul 2014
As at 30 Jun 2016, perpetual capital securities comprised:
 $300 mil 5.75% per annum, issued on 23 Jan 2014;
 $175 mil 4.80% per annum, issued on 29 Jul 2014. These were fully redeemed on 29 Jul 2016; and
 $500 mil 6.00% per annum, issued on 27 May 2016.

(15-09-2016, 07:29 AM)corydorus Wrote: Below recent report in Q2. Interestingly i did not see the 400M CPS. Wonder why.

----------------------------------
Perpetual capital securities
Amount
S$’000
At 1 Apr 2016 469,096
Add: perpetual capital securities issued in May 2016 494,885
At 30 Jun 2016 963,981
As at 30 Jun 2015, perpetual capital securities comprised:
 $300 mil 5.75% per annum, issued on 23 Jan 2014; and
 $175 mil 4.80% per annum, issued on 29 Jul 2014
As at 30 Jun 2016, perpetual capital securities comprised:
 $300 mil 5.75% per annum, issued on 23 Jan 2014;
 $175 mil 4.80% per annum, issued on 29 Jul 2014. These were fully redeemed on 29 Jul 2016; and
 $500 mil 6.00% per annum, issued on 27 May 2016.

one page above:

The total number of issued 6% Cumulative Non-convertible Non-voting Perpetual Class A Preference Shares (preference shares) as at 30 Jun 2016 were 4,000,000 (30 Jun 2015: 4,000,000). 

4,000,000 shares of SGD 100 each = 400 m
_______________________________________________________________________________________________________________________________________________

Yes I see that. But my question is why they are not put together since is titled "Perpetual capital securities" and "As at 30 Jun 2015, perpetual capital securities comprised:"

I got an immediate response from Hyflux !to share with Buddies. What this mean ? hmmm. So it should Rank higher than Preference shares since is Subordinated. Got the Subordinated term from FSM...

"The Preference Shares is not the same as Perpetual Capital Securities and hence not grouped together.
You may refer to Pg 13 of our 1H2016 financial statements for more information on the Preference Shares."

thanks

Cory

If its CPS is lower than the nominal value, will Hyflux be allowed to buy back from the market , so eventually it's equivalent to redeem it without paying any dividend ?


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(15-09-2016, 01:49 PM)SpaceX Wrote: If its CPS is lower than the nominal value, will Hyflux be allowed to buy back from the market , so eventually it's equivalent to redeem it without paying any dividend ?


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Hi SpaceX, 

Yes Hyflux is allowed to do such buybacks and thus need not pay dividends onwards. 

As of now the CPS is valued at 97.30; with hyflux having the option to redeem it at 100.00 end april 2018. However, it seems Hyflux is not redeeming despite the ""discount". This could be due to the fact that Hyflux's mgmt feels their cash can be deployed for more returns/projects. The CPS has 3 more semi annual dividends before the first optional redemption date, that about 9% of dividends. If Hyflux does redeem, current buyers of CPS will be looking at approximately 11.5% returns within a 1.5 yr timeframe. The downside is that Hyflux does not redeeem, and buyers will be left with collecting 8% dividends with no likelihood of seeing their principal.

<vested in Hyflux CPS>

Is interesting to see that with Ex-Div getting so near yet valued at 97.3 much below par. There are so much cash in Hyflux.

What's going on with the market or maybe Hyflux ?

Hyflux if we include their total perp and pref has an astounding 7.6x net debt to equity. Perp holders please be cautious.

(15-09-2016, 09:11 AM)Boon Wrote:

(15-09-2016, 07:29 AM)corydorus Wrote: Below recent report in Q2. Interestingly i did not see the 400M CPS. Wonder why.

----------------------------------
Perpetual capital securities
Amount
S$’000
At 1 Apr 2016 469,096
Add: perpetual capital securities issued in May 2016 494,885
At 30 Jun 2016 963,981
As at 30 Jun 2015, perpetual capital securities comprised:
 $300 mil 5.75% per annum, issued on 23 Jan 2014; and
 $175 mil 4.80% per annum, issued on 29 Jul 2014
As at 30 Jun 2016, perpetual capital securities comprised:
 $300 mil 5.75% per annum, issued on 23 Jan 2014;
 $175 mil 4.80% per annum, issued on 29 Jul 2014. These were fully redeemed on 29 Jul 2016; and
 $500 mil 6.00% per annum, issued on 27 May 2016.

one page above:

The total number of issued 6% Cumulative Non-convertible Non-voting Perpetual Class A Preference Shares (preference shares) as at 30 Jun 2016 were 4,000,000 (30 Jun 2015: 4,000,000). 

4,000,000 shares of SGD 100 each = 400 m
____________________________________________________________________________________________________________________________________________

http://infopub.sgx.com/FileOpen/SGX%20An...eID=432152

NOTICE OF REDEMPTION
TO HOLDERS OF THE
S$300,000,000 5.75 PER CENT. PERPETUAL CAPITAL SECURITIES (ISIN: SG6OE1000007)
(THE “CAPITAL SECURITIES”)
OF HYFLUX LTD (THE “COMPANY”)  
_______________________________________________________________________________________________________

-      Issued 500 m (6%) perp on 27 May 2016
-      The 175 m (4.8%) perp issued on 29 July 2014 were fully redeemed on 29 July 2016
-      Now, the 300 m (5.75%) perp issued on 23 Jan2014 would be redeemed by 23 Jan 2017
____________________________________________________________________________________________________________________