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.
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?
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.]
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