Latest update on Hyflux 6% CPS

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Hyflux shares and retail bonds have been in free fall for the past few days. Here are some facts and my thoughts:

  • For Aug 2017 1H 2017 result, Hyflux reported that “Continued weakness in Singapore power market is expected to adversely affect the Group’s performance for the rest of 2017 and we expect losses in next 2 quarters. Hyflux shares, retail bonds, as well as OTC bonds prices dropped. Hyflux did not pay dividends for their shares, but continued to pay dividends for both the retail bonds.
  • For Nov 2017 Q3 2017 result, as expected, Hyflux reports losses,  but the prices of their shares and retail bond dropped significantly, despite warning of losses 3 months ago. The prices of their OTC bonds did not move at all. At this rate, when Hyflux release their next quarter result in Feb 2018, the prices are likely to fall again.
  • Since then, there were no new news of Hyflux, but the shares and retail bonds continued to drop. OTC bond prices did not move much.
  • Partial divestment of loss-making Tuaspring Integrated Water and Power Project and full divestment of Tianjin Dagang Desalination Plant will shore up its balance sheet. Both assets have been recently shifted from non-current to current, this implies that Hyflux believes these assets will be sold within 12-months.
  • A rough approximation of these assets is approximately $1.04B. However, given that Tuaspring has not been able to break even due to the weak domestic power market, potential buyers should be able to buy at discount.
  • Hyflux’s quick ratio (excluding held for sale assets) is under 1, suggesting that the company must sell their assets to pay off upcoming liabilities. (current assets of $585.5m against current liabilities of $1.33b)
  • At 92.1, Hyflux 6% CPS Call 2018 YTC is 28.70% and net supercharged annualized return is 45%.
  • At 0.795, Hyflux 6% PCS Call 2020 YTC is 25.14% and net supercharged annualized return is 25.14%.

There is nothing new that we do not already know. But until Hyflux announces their asset sale, it certainly looks like Hyflux will be under pressure.

Hyflux 6% CPS with banker chip indicator.

Hyflux 4.6% 2019 – 6 months bond price – did not move since Oct, while shares and retail bonds in free fall.

 

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