Stocks

Hyflux to sink or swim with SembCorp Industries?

So PUB had taken over Tuaspring Desalination Plant in May 2019. Since then, affected investors never had a good sleep. But that does not really mark the end of Hyflux saga. While the spotlight had been on the Tuaspring Desalination Plant, it is important to note that Hyflux is more than just Tuaspring alone.

Hyflux saga stinks to the high heaven

The embattled home-grown water treatment company also has Tianjin Dagang in China, TuasOne Waste-to-Energy in Singapore and Qurayyat IWP in the Middle East. In this regard, there is still value left in Hyflux. But the burning question now is: should Temasek Holdings, via SembCorp Industries, rescue Hyflux from the ring of fire?

Hyflux

In my view, many signs point to SembCorp Industries becoming the ultimate white knight for Hyflux. Firstly, PUB’s role as regulator is to oversight water operators and develop policies. The function of PUB is not to operate water plants like Tuaspring. Secondly, why should Singapore taxpayers fund the staff salaries and maintenance of Tuaspring? Henceforth, it is only a matter of time that Tuaspring be transferred to a local operator.

In Singapore, SembCorp Industries remains the leading homegrown player in the utility sector, with business segments in power and water treatment. Thus, it will make sense for Temasek Holdings to rescue Hyflux via SembCorp Industries because of the opportunities of scaling for the latter. Incidentally, SembCorp Industries has both power plants and water treatment plants in Singapore, China and the Middle East. So in terms of synergies, SembCorp Industries also has the best fit with Hyflux.

Will the acquisition of Hyflux by SembCorp Industries be a match in heaven or a double trouble in the brewing?

SembCorp Industries should dance with Hyflux?

At the onset, SembCorp Industries has its own set of problems to deal with as its share price plunged by more than 50% since the onslaught of the slump in oil price in 2014. Thus, many investors may feel that the acquisition of Hyflux could be an unwelcome distraction for SembCorp Industries. I beg to differ.

Despite the slowdown caused by the ailing marine business, it should be highlighted that SembCorp Industries [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

Lost your Password?

Not a member yet? You may sign up to become a member of SG Wealth Builder. The full benefits and privileges of SG Wealth Builder Membership:

  1. Access to the latest premium articles of SG Wealth Builder
  2. Email notifications of latest blog articles
  3. Participate in SG Wealth Builder campaigns
  4. Request for coverage on stocks, insurance and other personal financial topics
  5. Comment in articles and Wealth Forum

SG Wealth Builder Membership

You may sign up for the SG Wealth Builder Membership for only $15 per month. As a member, you can access all the articles, including the premium ones.

Note: After payment is made, you will be prompted with registration form to create your user-id and personal password.

[wlm_paypalps_btn name=”SG Wealth Builder (Annual renewal)” sku=”7BB4D00C52″ btn=”pp_pay:l”]

One thought on “Hyflux to sink or swim with SembCorp Industries?

Leave a Reply