ChanKitWhyePrior to his retirement, Chan Kit Whye worked more than 30 years as Regional Finance Director, Financial Controller and Manager in a multinational specialty chemical business. He has played an active role in CPA (Australia) Singapore Branch, taking up positions in its Continuing Professional Development and Social Committees. Kit Whye is a Fellow of CPA Australia, CA of Institute of Singapore Chartered Accountants and CA of the Malaysian Institute of Accountants. He holds a BBus(Transport) Degree from RMIT, MAcc Degree from Charles Sturt University and MBA from Durham Business School.

HYFLUX reported full year 2013 revenue of $536 million and net profit of $43 million.

Compared to the previous year, revenue declined by 18% while net profit fell by 34%.

Depreciation, amortisation and asset impairment went up by a whopping 78% from $24 million in 2012 to $42 million in 2013.

Finance cost was up 29% from $21 million in 2012 to $27 million in 2013.

Hyflux incurred a Q4 loss of $6.55 million. Its Q4 revenue against declined by 54%.

Free cash flow (ie cash flow from operating activities less capex) has all along been negative, and in 2013 it was -$429 million while in 2012 was -$273 million.

Staff costs declined 13% from 2012 to 2013. Either salaries were cut, or there are people left unhappy. Without clarification, we all can anyhow speculate.

Reported earnings per share for 2013 was 2.4 cents vs previous year of 4.4 cents after allocating dividends to the 6% Preference shareholders of about $23.5 million.  

NAV per share stood at 58 cents.

hyflux_chart2.14Hyflux recently traded at $1.195 for a market cap of S$988 million. At its peak in 2011, the stock traded close to $2.50. Chart: Yahoo!

At the current share price, its PE is 51 times while its price-to-book ratio is 2.1 times.

Total debt outstanding stood at $1.27 billion giving a debt/equity ratio of 1.43.

Final ordinary dividend declared has been cut to 1.6 cents a share, 0.9 cents lower than previous year.

At the current share price, its full year dividend yield is at 1.9%.

In other words, Preference shareholders earn 6% yield, whereas ordinary shareholders get only 1.9% dividend yield.

My opinion: The current share price is too rich. Therefore, if you believe that this industry PE should be 20x, then its intrinsic value should be at only 0.48.

What is your opinion? 

OCBC is giving Hyflux a lot of face by downgrading the company value to $0.84.

My view of Hyflux value is only its net asset value of $0.584 if PE is not the way to value the company. 

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#1 potatolover 2014-03-10 22:50
The coming quarter's result might even be worse...
1st year tariff of 45 cents and PUB has been running desal plants at full capacity...

It could be surmised that Hyflux might be bleeding very badly for the next few quarters if PUB continues to max out their purchase of desal at the Tuaspring plant.

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