Hyflux shareholders to stage protest at Hong Lim

[Icedbs]

I think this Hyflux episode taught a lot of people that even a star company can also close shop if one or two decisions doesn't go their way.

 

From corporate management perspective, one lesson learned is to keep your business to your core expertise. The thing about  Tuaspring project is that they have the idea of bidding really low (to win the project) , and then selling the excess power from the power plant to cover the low water selling price to PUB. It was a brilliant idea, only problem is, they are no expert in power plant business. As such, they fail to realise that energy business is a cyclical one, and that energy prices can fall and affect their overall profitability especially when their low water price is dependent on the energy prices to give it a "lift".

 

In short, by structuring their bid that way, Hyflux has indirectly entered NOT into water business (which they are great at) but into a power plant business (which they are not good at).

 

It was really an episode of over-confident, over-sight and losing focus of their core competency. What surprise me however is that there are many parties involved in this....from auditors, bankers, regulators, board of directors, and Hyflux management.  Nobody saw the cyclical nature of energy business and analyse the worst case scenario of possible energy prices and ask if that can cover the low selling price of water?

Edited March 26, 2019 by Icedbs

[Yewheng]

I think this Hyflux episode taught a lot of people that even a star company can also close shop if one or two decisions doesn't go their way.

 

From corporate management perspective, one lesson learned is to keep your business to your core expertise. The thing about Tuaspring project is that they have the idea of bidding really low (to win the project) , and then selling the excess power from the power plant to cover the low water selling price to PUB. It was a brilliant idea, only problem is, they are no expert in power plant business. As such, they fail to realise that energy business is a cyclical one, and that energy prices can fall and affect their overall profitability especially when their low water price is dependent on the energy prices to give it a "lift".

 

In short, by structuring their bid that way, Hyflux has indirectly entered NOT into water business (which they are great at) but into a power plant business (which they are not good at).

 

It was really an episode of over-confident, over-sight and losing focus of their core competency. What surprise me however is that there are many parties involved in this....from auditors, bankers, regulators, board of directors, and Hyflux management. Nobody saw the cyclical nature of energy business and analyse the worst case scenario of possible energy prices and ask if that can cover the low selling price of water?

Yup, and billout should not be the solution, as the problem will pass to taxpayers money.

[Yewheng]

Maybank may apply to block PUB. Then it will be up to the court to decide, creditors with a charge over the water plant or a customer with a 30 year supppy contract have priority over the other party. The sum is huge, Maybank unlikely diam diam do nothing and eye big big see PUB cheong kong the assets.

There is always risk involved no matter how small it is. So maybank have to accept it. If maybank succeed doing it, it will set precedent in future similar cases. Then how? End up keep want government billout meh? Like that end up big cooperation make bad decisions, government billout, end up government expenditure increase exponentially. Worst is even after government billout it is still not making profit and keep making losses. Like that how? Government spending increases because of billout end up taxpayers suffer by paying for it, then the company still continue to make losses. End up everyone is on the losing end.

Edited March 26, 2019 by Yewheng

[Mustank]

Hyflux borrowed money from Maybank to build the Tuasspring.

When Tuas spring is sold, the money suppose must go to Maybank first.

Same as we borrow money to buy house. If we cannot pay, the bank re-po and sell our house to get back money. whatever shortfall, we need to top up or declare bankrupt if we no money to pay.

 

But... if PUB cheong kong Tuas spring, Maybank will get nothing back. Hyflux is bankrupt anyway. $1million or $1billion. might as well make it $1billion.

 

Singapore smart or not?

 

Anyone knows whether Maybank has a charge over the tuas spring?

[Kusje]

There is always risk involved no matter how small it is. So maybank have to accept it. If maybank succeed doing it, it will set precedent in future similar cases. Then how? End up keep want government billout meh? Like that end up big cooperation make bad decisions, government billout, end up government expenditure increase exponentially. Worst is even after government billout it is still not making profit and keep making losses. Like that how? Government spending increases because of billout end up taxpayers suffer by paying for it, then the company still continue to make losses. End up everyone is on the losing end.

 

I don't think he is saying maybank is asking for a bail out.

 

Think of it this way - I owe you 50k and also owe ah gong 50k. Unfortunately I only have 20k. 

 

So how to split? How come ah gong can collect his 20k first and leave you with nothing?

[Knoobie]

"To illustrate its point, Hyflux said the average wholesale electricity price dropped from about S$220 per MWh in 2011 to an average of S$81 per MWh in 2017. This resulted in “significant losses from electricity generation”, it added."

 

 

From 2011 to 2017 didn't our electricity price gone up instead

 

hyflux dulan liao! govt don't want help so sabo them! 

[Datsun366]

Was.

 

Now Singaporean.

Watt is the difference?

 

Annie way.

 

Besides official reports must tap into internal grapevine.

 

After aural analysis, 青翼福王 did not like taste, hence neber buy.

[Yewheng]

I don't think he is saying maybank is asking for a bail out.

 

Think of it this way - I owe you 50k and also owe ah gong 50k. Unfortunately I only have 20k.

 

So how to split? How come ah gong can collect his 20k first and leave you with nothing?

I see, then like this ah gong is wrong.. That should be stopped.. Edited March 27, 2019 by Yewheng

[Philipkee]

I think this Hyflux episode taught a lot of people that even a star company can also close shop if one or two decisions doesn't go their way.

 

From corporate management perspective, one lesson learned is to keep your business to your core expertise. The thing about Tuaspring project is that they have the idea of bidding really low (to win the project) , and then selling the excess power from the power plant to cover the low water selling price to PUB. It was a brilliant idea, only problem is, they are no expert in power plant business. As such, they fail to realise that energy business is a cyclical one, and that energy prices can fall and affect their overall profitability especially when their low water price is dependent on the energy prices to give it a "lift".

 

In short, by structuring their bid that way, Hyflux has indirectly entered NOT into water business (which they are great at) but into a power plant business (which they are not good at).

 

It was really an episode of over-confident, over-sight and losing focus of their core competency. What surprise me however is that there are many parties involved in this....from auditors, bankers, regulators, board of directors, and Hyflux management. Nobody saw the cyclical nature of energy business and analyse the worst case scenario of possible energy prices and ask if that can cover the low selling price of water?

Because there is an uncanny trust in people in charge. So no one questions.

 

BOD trust the CEO.

Auditors make sure everything is accounted for.

Regulators make sure no law is broken.

 

NO ONE checks of the CEO is making the right decision.

 

Like buying a car.

AD helps you choose

Your bank helps you pay

LTA makes sure your car is legal

 

NO ONE checks that you need a car in the first place. Everyone, including your family, blindly agree with your decision trusting you know best.

[Yewheng]

Because there is an uncanny trust in people in charge. So no one questions.

 

BOD trust the CEO.

Auditors make sure everything is accounted for.

Regulators make sure no law is broken.

 

NO ONE checks of the CEO is making the right decision.

 

Like buying a car.

AD helps you choose

Your bank helps you pay

LTA makes sure your car is legal

 

NO ONE checks that you need a car in the first place. Everyone, including your family, blindly agree with your decision trusting you know best.

Of coz la, it cannot be down to authorities need to check whether need a car in the 1st place right? This one is down to individuals already. They need or do not need its their own problem. As long as everything is legal and can pay that's the end of story.

[Angcheek]

Already I am asking how PUB, as the manager of the public money going into Hyflux, will be answering to us tax payers how our money are suddenly written off just because Hyflux has mismanaged itself to the ground?

 

Zero dollar take over a negative value asset nevermind, and other compensation are forfeited/written off? 

 

And this Mr Leong is asking for goodwill towards investors like him? Might as well ask for charity?! 

 

So the question is Will or Will Not Ah Gong cough out the money for them ... 

[Kangadrool]

remember the analogy someone mentioned that it's very difficult to exprain the price mechanism to to layperson?

 

 

When sugar increase 10 cents per kg, your kopi also increase 10 cents per cup, but they didn't add 1 kg of sugar in your cup of kopi.

 

Best is kopi O kosong also increase 10 cents.

 

"To illustrate its point, Hyflux said the average wholesale electricity price dropped from about S$220 per MWh in 2011 to an average of S$81 per MWh in 2017. This resulted in “significant losses from electricity generation”, it added."

 

 

From 2011 to 2017 didn't our electricity price gone up instead

 

Edited March 27, 2019 by Kangadrool

[Vid]

So the question is Will or Will Not Ah Gong cough out the money for them ... 

 

You must be joking [laugh]

[Fcw75]

You must be joking [laugh]

April’s Fool coming ma...

[Voodooman]

So the question is Will or Will Not Ah Gong cough out the money for them ...

Then Ah Gong must bail out almost everyone in the energy industry.

[Inlinefour]

sunshine empire or madoff style  

[Windwaver]

A company dealing with water and power has to close shop whilst the CEO collects big fat pay and bonus. I thought she was also voted some title not too long ago. The poor public who listen to all these news reports thought they followed the right investment since news were from official sources. 

 

Reminds me of banks 

 

It's going to be a political suicide if the government tries to intervene.

 

However, maybe it's good that a protest can let off some steam without any harm done 

[Xers007]

This SM didnt check on hyflux agreement with PUB before agreeing the investment one meh? A bit strange when this investment is so huge.