Commentary: Hyflux after the perfect storm

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Once a star in the water treatment industry, Hyflux had been struck by a series of unfortunate events and some think its fate is sealed, say NUS ...

MAJOR ROAD BUMPS

In the most recent five years, the main source of funds were perpetual debt and preference shares. Its debt-to-equity ratio had been on a steady uptrend, which could have been beneficial if profits were healthy as the interest expense can serve as tax shields. Hyflux had also suffered losses from 2015. Profits in 2013 and 2014 were low. Net cash from operating activities had been negative since 2010.

Its iconic success and Olivia Lum’s rags-to-riches story captured the imagination of many, and investors may have become careless. They may have been attracted by the high yields. Issuers can claim up to 100 per cent of their credit rating expenses, subject to a cap of S$400,000 per issuer.

 

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