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-   -   Hyflux 6% Perpetual Securities (https://forums.hardwarezone.com.sg/stocks-shares-indices-92/hyflux-6%25-perpetual-securities-5372221.html)

SpinFire 17-05-2016 10:13 AM

Hyflux 6% Perpetual Securities
 
New perpetual securities for retail investors
http://www.businesstimes.com.sg/comp...erpetuals-at-6

Key info
For these perps, Hyflux said distributions shall be payable semi-annually in arrears on May 27 and Nov 27 of each year, with the first payment of distributions scheduled to be made on Nov 27, 2016.

On or after the May 2020 distribution payment, however, the rate may be reset to the swap offer rate (SOR) on the relevant reset date plus an initial spread of 4.2 per cent per annum plus a step-up margin of 2 per cent per annum, Hyflux added.



Initial comments
Hyflux previously issued cumulative preferred shares in 2011 (more details here and here) with a 6% p.a. payout.

Actually I think that the 2011 issue could be a better deal. It's currently trading at ~4% with about 2 years left to next redemption date (yield-to-worst) and ~7.4% if it's not redeemed (yield to maturity).

More comments welcome!

kehyi4 17-05-2016 11:51 AM

From bondsupermart, Hyflux has these bonds and perps outstanding:

HYFSP 3.500% 21Jul2016 Corp (SGD)
HYFSP 4.250% 07Sep2018 Corp (SGD)
HYFSP 4.200% 29Aug2019 Corp (SGD)
HYFSP 4.600% 23Sep2019 Corp (SGD)

HYFSP 6.000% Perpetual Pref (SGD) - Retail
HYFSP 6.000% Perpetual Corp (SGD) - Retail
HYFSP 5.750% Perpetual Corp (SGD)
HYFSP 4.800% Perpetual Corp (SGD)

I think the new issue is meant to replace the Jul 2016 one, rather than the 6% CPS

SpinFire 17-05-2016 11:59 AM

Quote:

Originally Posted by kehyi4 (Post 101403372)
From bondsupermart, Hyflux has these bonds and perps outstanding:

HYFSP 3.500% 21Jul2016 Corp (SGD)
HYFSP 4.250% 07Sep2018 Corp (SGD)
HYFSP 4.200% 29Aug2019 Corp (SGD)
HYFSP 4.600% 23Sep2019 Corp (SGD)

HYFSP 6.000% Perpetual Pref (SGD) - Retail
HYFSP 6.000% Perpetual Corp (SGD) - Retail
HYFSP 5.750% Perpetual Corp (SGD)
HYFSP 4.800% Perpetual Corp (SGD)

I think the new issue is meant to replace the Jul 2016 one, rather than the 6% CPS

Arh you're right. I didn't see the other issues.

I think they'll redeem the 4.8% Perp. It has a step-up on 29 July 2016

kehyi4 17-05-2016 12:33 PM

Quote:

Originally Posted by SpinFire (Post 101403509)
Arh you're right. I didn't see the other issues.

I think they'll redeem the 4.8% Perp. It has a step-up on 29 July 2016

yeah, the 4.8% perp is 175mil, the 3.5% Jul16 is 100mil, so they'll need 275mil.

The new issue is 300mil, just nice.

nats7798 17-05-2016 01:42 PM

When open to press?

Asphodeli 17-05-2016 02:34 PM

EDIT: PHS is out, wow, seems like a damn good deal unless Hyflux calls it back (it's an "all or nothing" callable, first call date May 2020)? Usually this sort of terms is only available for institutionals/AIs, I think. And at 6% for the next 4 years...wow. If the 4-year SOR rate goes up in 2020, Hyflux will definitely have to call this.

w1rbelw1nd 17-05-2016 02:46 PM

Quote:

Originally Posted by Asphodeli (Post 101406088)
EDIT: PHS is out, wow, seems like a damn good deal unless Hyflux calls it back (it's an "all or nothing" callable, first call date May 2020)? Usually this sort of terms is only available for institutionals/AIs, I think. And at 6% for the next 4 years...wow. If the 4-year SOR rate goes up in 2020, Hyflux will definitely have to call this.

So in your opinion the returns is enough to justify the risk involved for this?

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SpinFire 17-05-2016 03:15 PM

Quote:

Originally Posted by Asphodeli (Post 101406088)
EDIT: PHS is out, wow, seems like a damn good deal unless Hyflux calls it back (it's an "all or nothing" callable, first call date May 2020)? Usually this sort of terms is only available for institutionals/AIs, I think. And at 6% for the next 4 years...wow. If the 4-year SOR rate goes up in 2020, Hyflux will definitely have to call this.

Any idea which period SOR rate is applied for the step-up option?

Oh found it, using 4 year SOR. Didn't know there's a 4 year SOR option, thought its 1m 3m 6m lol

Asphodeli 17-05-2016 03:28 PM

Quote:

Originally Posted by SpinFire (Post 101406776)
Any idea which period SOR rate is applied for the step-up option?

Oh found it, using 4 year SOR. Didn't know there's a 4 year SOR option, thought its 1m 3m 6m lol

Yeah that's why...got such things one ah? Lol :s22:

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arctician 17-05-2016 03:29 PM

definitely gg to press this, its a no brainer

still rem in 2011 hyflux CPS 6% was up 3-4% on first day of trading and i was only allocated 20% of placement

anyone know when can press?

Asphodeli 17-05-2016 05:11 PM

Public Offer and Placement begins TOMORROW 18 May, 9am. Closing date 25 May 12 noon.

SpinFire 17-05-2016 05:17 PM

Quote:

Originally Posted by Asphodeli (Post 101408968)
Public Offer and Placement begins TOMORROW 18 May, 9am. Closing date 25 May 12 noon.

The placement size so small, it'll probably be filled within a day. Think I'll press a small amount to expand my bond portfolio

Asphodeli 17-05-2016 05:22 PM

Quote:

Originally Posted by SpinFire (Post 101409072)
The placement size so small, it'll probably be filled within a day. Think I'll press a small amount to expand my bond portfolio

Yeah it's geared towards public. IIRC this was the practice for the previous one also. Not sure if the CEO wants everyone to share the wealth, or it's a sign of weakness on their balance sheets.

Personally I think it's good to hold if you're holding the shares, as it will hedge against the unstable dividends on it.

arctician 17-05-2016 05:30 PM

how come no official banner or brochure one huh

very hush hush sia..if never see this thread i will nvr know

Asphodeli 17-05-2016 05:31 PM

Quote:

Originally Posted by arctician (Post 101409260)
how come no official banner or brochure one huh

very hush hush sia..if never see this thread i will nvr know

Haha hush hush is good what, no meh? Anyway it was announced on SGX website, corporate announcements page this morning.

BTW prospectus and PHS are out liao on MAS OPERA.

Average 17-05-2016 05:31 PM

Press liao can huat?

arctician 17-05-2016 05:33 PM

Quote:

Originally Posted by Asphodeli (Post 101409291)
Haha hush hush is good what, no meh? Anyway it was announced on SGX website, corporate announcements page this morning.

BTW prospectus and PHS are out liao on MAS OPERA.

yea but usually will be on TODAY or mypaper

hush also good..very hard to get allocation one

if want to get allocated $10K, min must press for $50k

SpinFire 17-05-2016 07:00 PM

Quote:

Originally Posted by arctician (Post 101409260)
how come no official banner or brochure one huh

very hush hush sia..if never see this thread i will nvr know

This issue was just announced this morning only. You should see the advertisements all over the papers from tomorrow

w1rbelw1nd 17-05-2016 07:24 PM

Quote:

Originally Posted by Asphodeli (Post 101409134)
Yeah it's geared towards public. IIRC this was the practice for the previous one also. Not sure if the CEO wants everyone to share the wealth, or it's a sign of weakness on their balance sheets.

Personally I think it's good to hold if you're holding the shares, as it will hedge against the unstable dividends on it.

Not so sure if "hedge" is the appropriate word here, since the risk is still to the same company and its industry.

In the first place, if you want stable dividnends, you wouldn't want to invest in a EPC contractor right?

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Asphodeli 17-05-2016 08:03 PM

Quote:

Originally Posted by w1rbelw1nd (Post 101411339)
Not so sure if "hedge" is the appropriate word here, since the risk is still to the same company and its industry.

In the first place, if you want stable dividnends, you wouldn't want to invest in a EPC contractor right?

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haha true, that. but i look from it as a "total exposure" view, i.e. how much has been allocated. if buying a bond makes the yield more stable, and stabilizes the common stock's volatility, yeah why not?

shenglong88 17-05-2016 08:07 PM

Good to Hoot?

cuntzbuster 17-05-2016 08:12 PM

https://www.bondsupermart.com/main/a...imes-ahead-291

w1rbelw1nd 17-05-2016 10:56 PM

Quote:

Originally Posted by StockBot (Post 101412259)
If i not wrong like 30 mil of it is reserve for staffs to press
So they eating their own cooking too

The gearing is high, thus the yield is high too
Given a choice between the mother stock vs the perp bonds
I would take the perp bonds for sure

Yes, I don't see much upside of hyflux equity as well, may be better to own the PCS and pray that the company no adverse events leading to defaults.

Once hyflux starts deferring its coupon payments for its "real debts", maybe 2-3 years worth of 6% dividend won't be enough to cover the potential capital loss through sale of PCS in sgx. buyers beware....

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foozgarden 18-05-2016 07:00 AM

in event of default.
bond holders get paid first then mother share holders?

homedriver 18-05-2016 07:25 AM

Sorry to ask how to apply this? Like IPO through Internet banking can?

Asphodeli 18-05-2016 07:35 AM

Quote:

Originally Posted by foozgarden (Post 101419092)
in event of default.
bond holders get paid first then mother share holders?

Creditors (I.e. Banks), then bond holders, then shareholders

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Asphodeli 18-05-2016 07:35 AM

Quote:

Originally Posted by homedriver (Post 101419230)
Sorry to ask how to apply this? Like IPO through Internet banking can?

Yup. 9am then open hor

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SCG8866T 18-05-2016 08:11 AM

Wow net debt to equity 3.315x worse then aspial and its perpetual means no maturity. Have to study more indepth to decide.

homedriver 18-05-2016 08:23 AM

Quote:

Originally Posted by StockBot (Post 101412276)
Not much capital gains one
If want to press the mindset should be hold for 5 years
Each year earn 6%

But can trade anytime like stock if need to cash out?

Asphodeli 18-05-2016 08:36 AM

Quote:

Originally Posted by homedriver (Post 101419815)
But can trade anytime like stock if need to cash out?

yes, as long as it is offered to the public (i.e. can press at ATM), means it will be listed on SGX, except for Singapore Savings Bonds

tmkedmw 18-05-2016 08:37 AM

Quote:

Originally Posted by homedriver (Post 101419815)
But can trade anytime like stock if need to cash out?

Yes, can trade on sgx just like the previous 6% public tranche.

foozgarden 18-05-2016 08:45 AM

Quote:

Originally Posted by SCG8866T (Post 101419688)
Wow net debt to equity 3.315x worse then aspial and its perpetual means no maturity. Have to study more indepth to decide.

ya, their debt level is scary

SCG8866T 18-05-2016 09:11 AM

Anyone know if temasek is currently vested in Hyflux?

SCG8866T 18-05-2016 09:17 AM

Quote:

Originally Posted by foozgarden (Post 101420098)
ya, their debt level is scary

Sorry should be 0.99x

Asphodeli 18-05-2016 09:19 AM

Quote:

Originally Posted by SCG8866T (Post 101420512)
Anyone know if temasek is currently vested in Hyflux?

Don't think so. From their latest AR:

http://i.imgur.com/CyDqfOi.png
http://i.imgur.com/0rS4xum.png

epiphany01 18-05-2016 09:54 AM

Quote:

Originally Posted by foozgarden (Post 101419092)
in event of default.
bond holders get paid first then mother share holders?

to be precise:
creditors > senior bond holders > subordinated bond holders> pref shares (sometime can be pari passu with sub bond holders) > ordinary share holders

SCG8866T 18-05-2016 10:51 AM

Did more data churning. 70% of their revenue comes from sg. Their net asset (after deducting total liabilities) is S$1.23bil. Net debt(total liabilities minus cash) is $1.216bil. Means net debt to equity is ard 0.99x. Total cash on hand 165mil(quite low). Net gearing 0.98x(quite high).

Pro: majority of their top line comes from Singapore. Municipal sector continued to be the main contributor. TuasOne WTE project is the main driver to 1Q2016 revenue.

They have good access to capital markets, means can easily raise money to refinance.

Con: neg free cash flow, high net debt, exposure to the middle east and china, high gearing. Pref shares and bonds interest expenses eating up most of their bottom line..

Guojing88 18-05-2016 06:06 PM

Can someone explain the May 2020 event in plain English?

lzydata 18-05-2016 08:35 PM

Quote:

Originally Posted by Guojing88 (Post 101429814)
Can someone explain the May 2020 event in plain English?

Starting Nov 2016 and up to May 2020, Hyflux will pay 6% pa every May and Nov.

After May 2020, if the perps are not redeemed, the interest rate will be reset to X% + 6.20% where X% is the 4-year Swap Offer Rate (SOR) on the second business day prior to the reset date. If Hyflux continues not to redeem, this will also happen in May 2024, 2028 etc.

According to the OIS, the 4-year SOR on 16 May 2016 is 1.80%. Assuming the 4-year SOR around May 2020 is the same, the interest rate on the perps will be 1.80% + 6.20% = 8.00% pa.

lzydata 18-05-2016 10:12 PM

Placement results out, looks like the big boys are hungry for yield. $217m subscribed for $50m, now the placement allocation is $165m and public offer is only $115m.

http://infopub.sgx.com/Apps?A=COW_Co...May%202016.pdf

http://infopub.sgx.com/Apps?A=COW_Co...May%202016.pdf

zuoom 18-05-2016 10:26 PM

er, perpetual securities can touch one??

arctician 18-05-2016 11:51 PM

Quote:

Originally Posted by lzydata (Post 101434127)
Placement results out, looks like the big boys are hungry for yield. $217m subscribed for $50m, now the placement allocation is $165m and public offer is only $115m.

http://infopub.sgx.com/Apps?A=COW_Co...May%202016.pdf

http://infopub.sgx.com/Apps?A=COW_Co...May%202016.pdf

5x oversubscribed..very good sign

gg to whack this weekend..hope can get some private placement

arctician 19-05-2016 12:14 AM

Quote:

Originally Posted by StockBot (Post 101436078)
erm... i think cannot like that see

usually for most IPO the insti tranche is way bigger than retail tranche... sometimes insti tranche is 10x or 20x bigger

but for this issue the insti tranche is way way small than usual

however still, the retail tranche will be over subcribed for sure as investors are hungry for yield and blind on the fundamentals

I expect retail tranche to be 2-3 times over subscribed cheers

ya i know..but still 4x oversubscription for institutional investors are a good sign

i subscribed to the perps few years back..only got allocated 20% and up 4% on first day

if you got allocated $100k and it move up by 5%, $5k in pocket

w1rbelw1nd 19-05-2016 12:19 AM

Quote:

Originally Posted by arctician (Post 101436126)
ya i know..but still 4x oversubscription for institutional investors are a good sign

i subscribed to the perps few years back..only got allocated 20% and up 4% on first day

if you got allocated $100k and it move up by 5%, $5k in pocket

All these insurance companies, banks, investment firms etc are in a much better position to take on these risky perpetuals than us peasants... They have access to OTC bond markets to diversify their risk. So having these institutions subscribe may just mean that risk is not too big for them. But for us the same cannot be said...

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Weaboo 19-05-2016 12:24 AM

Yea I rmb Liao that's why I deleted my post

Quote:

Originally Posted by StockBot (Post 101436202)
OTC market few hundred over bonds to buy and build a portfolio
but retail market for SGX.. think only like 6-7 decent bonds so harder to build a bond portfolio

example building a ladder bond portfolio
https://www.fidelity.com/viewpoints/...adder-strategy

for sgx market... very hard to do so for retail investors


arctician 19-05-2016 01:03 AM

Quote:

Originally Posted by StockBot (Post 101436195)
in 2011 i think hyflux was like a hot stock, $2+
the IPO was very hot, u get 20% very good liao
and yeah first day up can take profit liao

this time round... after 5 years
hyflux fundamentals has weaken, and investors expect rates to go up
so I dont think it will be as hot
ppl will still press ba, but dun think will give 20% so less... likely will be more... I have to guess maybe 40-50% for retail

i never think so much, just know i have to press, stag and go :s13:

to me this is low risk high return

SCG8866T 19-05-2016 07:27 AM

Quote:

Originally Posted by arctician (Post 101436521)
i never think so much, just know i have to press, stag and go :s13:

to me this is low risk high return

Hyflux has much better fundamentals than oxley and aspial. Although cant compare like that as water business very diff from property business which needs alot more loan. Net asset after deducting all liabilities is ard S$1.2bil. Net debt to equity also below 1 at 0.99x. They supplying 35% of water in Singapore. Their 750mil waste to energy contract with NEA will give them a decade of recurring income. Only prob i see is their cash flow, future order book growth and debt management. Their loan interest is eating away at their bottom line.

SpinFire 19-05-2016 09:30 AM

Quote:

Originally Posted by SCG8866T (Post 101438417)
Hyflux has much better fundamentals than oxley and aspial. Although cant compare like that as water business very diff from property business which needs alot more loan. Net asset after deducting all liabilities is ard S$1.2bil. Net debt to equity also below 1 at 0.99x. They supplying 35% of water in Singapore. Their 750mil waste to energy contract with NEA will give them a decade of recurring income. Only prob i see is their cash flow, future order book growth and debt management. Their loan interest is eating away at their bottom line.

Does the debt component used in calculation include the preferred shares and perpetual securities? If I'm not wrong, these loans are considered equity on the balance sheet, and may understate the debt levels.

I wonder how's the subscription rate for the tranche reserved for Hyflux staff. The placement tranche subscription is hot. Any insiders here who can comment? :D

thegodfather 19-05-2016 10:54 AM

may i know how does one subscrible or buy this? o have never bought bonds before can anyone share and is there a min amount? 6% /year is not bad leh..

luxcan 19-05-2016 11:23 AM

I wouldn't touch it
 
I have been following (or own) hyflux stocks since 2013. It seems to me that Hyflux is having difficulties sourcing for new incomes or meeting construction deadline (which in the end incurred further operating costs).


Dahej Plant
They are rewarded to build a 336,000 m3/day SWRO desalination plant in Dahej in 2012. In their 2013 and 2014 annual reports, they have been reporting that they are "working on it". In 2015 report, they have secretly remove the project.

What actually happened to it:
http://www.financialexpress.com/arti...of-day/122971/


Tuaspring
Won tender to build desalination plant and a power facility to power up the desalination plant in 2011. The desalination plant has been completed in 2013 but the power facility has been delayed til 2015 which incurred extra operating costs as the plant has to "buy" power from other sources.

Losing out on local desalination plant contracts.
As someone mentioned, most of Hyflux revenues comes from Singapore, hence it is worrying that Hyflux started to lose out local desalination and newater contract (after Tuaspring project).

http://news.asiaone.com/news/singapo...r-plant-changi
http://www.channelnewsasia.com/news/...d/2265030.html

It is important to see if Hyflux manage to clinch the upcoming 4th desalination plant.



Disclaimer: Above is just my noob opinion on Hyflux and yes, i am still holding Hyflux stocks.


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