Hyflux: Divestment as gap closed at $1.365.

My sell order at $1.365 was filled today. This is the gap filling I talked about before. 

Could price move higher in the next session? It could, of course.

However, the upper wick in today's white candle as price touched a high of $1.37 before closing at $1.35 suggests that selling pressure is very much present. 

Moving higher on lower volume compared to two sessions ago is also a sign of caution.

The declining 100dMA is likely to exert downward pressure on price action. 

So, further upside could be capped at $1.385 or so. In a retracement, expect some support at $1.21.

Related post:
Hyflux: Retest of recent high.

Hyflux: Retest of recent high.

Resistance at $1.28 gave way today as price retested the recent high of $1.35. Volume was relatively high. This translates into a higher probability of price pushing higher in the next session. Remember that volume is the fuel that drives rallies.

MACD continues to rise in positive territory. Buying momentum is still positive and strengthening. The MFI continues to rise after bouncing off 50% a few sessions ago. This suggests that demand is still strong.

There is a chance of the counter's price testing $1.39 in the near future. However, I would be happy to divest partially at $1.365 where price could close the gap formed in early November 2011.

Related post:
Hyflux: Early stage of trend reversal?

Hyflux: Early stage of trend reversal?

I was going to blog about Hyflux last night but I got home rather late. Anyway, Hyflux's share price has been rather bouyant. Immediate resistance at $1.28 is a relatively weak one but it does not mean that it cannot prevent price from going higher.

People sometimes ask me how do I tell if a resistance or support is weak or strong. If it was tested many times before, it is strong. If it was tested many times before in the weekly chart, it is even stronger. It is stronger if it had not been compromised when tested in the recent past. Of course, there is an element of subjectivity here and these are just my little ideas.

Yesterday, a white candle with a long upper wick was formed as price closed at $1.27 after touching a high of $1.30. Volume was relatively high but the long upper wick suggests some selling pressure was present as traders locked in gains.

MACD is still rising in positive territory which suggests that there is positive buying momentum. The lower trading volume in the first two hours of the current session suggests a possibly less exuberant Mr. Market. So, do I sell? I could do so and book a gain.

However, I see that the declining 50dMA has acted as support. It is currently at $1.215. The 20dMA has turned up a few sessions ago and looks like it could form a golden cross with the 50dMA in time. So, with immediate support at $1.215 and with the MACD rising, there is a chance that price could go higher, given some time.

In the weekly chart, it is worth noting that the MACD has turned up and completed a bullish crossover with the signal line. However, it is still in negative territory. So, momentum is still negative in the longer term and any upward movement in price could be fraught with obstacles. Having said this, the development in the weekly chart suggests that selling pressure has eased and could see investors loading up at supports with less trepidation.

A higher high could see resistance provided by the declining 100dMA tested. This is at $1.39. Before that, we might see gap filling at $1.365. For anyone who is in the money, a partial divestment to lock in some gains could be considered. For anyone who would like to add to his long position, buying as close to the support of $1.215 as possible would be nice.

P.S. I am unable to include charts in this blog post. I might do it later this evening at home. Of course, the charts could look different by the close of today's session.

Daily Chart:

Weekly Chart:

REITs, NOL, ARA and Hyflux.

Hope everyone had an enjoyable long weekend and is not missing the holidays too much.

The bullish movement in the stock market should put smiles on the faces of long holders. Has the bear been vanquished? I think it is too early to think so. So, we might want to make use of the bullish sentiment to lighten our long positions.

For me, I am still heavily invested in selected S-REITs as they could continue to deliver predictable passive income even in a zero growth environment. This is quite different, however, from thinking that S-REITs' unit price would not suffer in tandem with the broader market in the event of a crash. Indeed, it would be naive to think so although, with stronger balance sheets, we should not see the same magnitude of decline as in the last global financial crisis.

If we believe that money should go to where it is treated best, any significant decline in the unit prices of the S-REITs in my portfolio would tempt me with higher yields to add to my long positions. For now, I am keeping the status quo with regards to my S-REITs portfolio.

What about lightening my long positions? Share prices of certain companies went up quite a bit yesterday and I tried to sell some.

Today, my sell order for NOL at $1.22 was filled. With this partial divestment, I made some pocket money from Mr. Market. Why $1.22? That was the high of early September. Indeed, a safer resistance to sell at would be $1.18 as it has been tested many times. I took a chance that the buying momentum could push price pass $1.18 and it paid off. Indeed, price touched a high of $1.23.

However, the formation of a shooting star on the back of higher volume today suggests that NOL's share price could be heading lower from here. If $1.18 cannot serve as support, we could see price retreating to $1.10 which is where we find the 50d and 100d MAs merging.

I was not so lucky with another two counters, ARA and Hyflux.

People would say that ARA's trading volume is so thin most of the time that TA is inaccurate here. I didn't really bother using TA this time as I simply remember selling at $1.30 the last time and tried to do it again this time. Its share price did touch $1.30 last evening but my sell order was not filled. Trying to sell again today at $1.30 proved to be futile.

Well, it is back to the waiting game. If $1.30 should be taken out, I wonder if the next target is $1.45? Allow me my little day dreams.

As for Hyflux, the many white candle days on the back of expanding volumes led me to think that we could possibly see gap closing at $1.365 or even see a test of the support turned resistance of $1.39. Deciding not to be too greedy, I entered a sell order at $1.36. Unfortunately, it turns out that I was still too greedy.

Anyway, looking at the chart, immediate supports are at $1.24 and $1.225. The formation of a black candle on the back on lower volume is good news for long holders. However, that the black candle covers more than half of the preceding day's white candle is ominous. The MACD is rising strongly but it is still in negative territory. So, things could go awry.

I partially divested some of my investment, locking in a small gain in the process. I am just simply managing risk here by reducing exposure. If price should continue its upward trek, I would still stand to gain.

Finally, turning our attention away from the stock market, I have put up new blog posts on my recent trip to Japan. See them at Travel Photos and Videos. More to come. :)

Outside Lumine, Shinjuku. Kitty, "Hey! You can do it!" Believe it!

Related post:
Hyflux: Broke resistance.

Hyflux: Broke resistance.

On 15 Dec, I said, "Right now, $1.065 is immediate support provided by the 123.6% Fibo line. A stronger support would be at $1.015, the 138.2% Fibo line and a golden ratio."

Hyflux's share price touched $1.015 on 23 Dec, forming a white spinning top at the end of that session. A positive divergence was also formed in the process. A lower low in price and a higher low in the MACD. A buy signal. Congratulations to anyone who went in on the long side then! (I think I was visiting museums, temples and shrines in Ueno that day.)

Its share price has overcome the resistance provided by the 20dMA. Any further increase in share price will see resistance at $1.22 (the high in early December) and $1.24 (as provided by the declining 50dMA).

There is, however, no sign of a trend reversal in the weekly chart. So, conventional wisdom would suggest selling into strength instead of holding. If $1.24 could be overcome convincingly, there is a chance that the declining 20wMA which would approximate $1.39 next week could be tested. This would coincide with a natural candlestick support. Whether it would happen would depend on the strength of this rebound.

A partial divestment at immediate resistance could be prudent although the very high volume that accompanied the formation of the long white candle in the weekly chart holds promise for long holders. Good luck to fellow shareholders.

Related post:
Hyflux: Continuing downtrend.

Hyflux: Continuing downtrend.

My recent decision to go long in Hyflux has turned out poorly. It was a decision heavy on TA and almost nothing FA wise. So, should I cut? Regular readers know that I do not like to cut as prices are declining.

Prices go down a river of hope and I would like to cut on rebounds and if prices should test resistance. If the opportunity does not present itself, then, it is another stock for the freezer.

I have always liked Hyflux's business but in the last crisis, I chose to invest in E-pure instead for its less demanding valuation. Some told me that Hyflux would be safer as E-pure was an S-chip. We are probably all affected at the subconscious level in the same way.

In the last crisis, Hyflux touched a low of $1.11 in October 2008. Today, this low has been taken out.  Does this mean that Mr. Market feel that Hyflux will do a lot worse compared to the last crisis? It does seem to be the case.

Despite all the concerns raised regarding Hyflux's debt, its numbers are still pretty good.

Net margin:
13%. This is a good business.

Net gearing:
0.1x. Concerns regarding Hyflux's debt overdone perhaps?

Contributions from Tuaspring Desalination Plant to start in FY2012.

See slides presentation 3Q FY2011: click here.

Technically, Hyflux is in a downtrend. Looking at the chart, the very long term support would be at $1 (a many times tested support back in 2002) and $0.86 (the low of 9 Sep 2002). Would these be tested in time? No one can say but if they should be tested, they would be buying opportunities.

Right now, $1.065 is immediate support provided by the 123.6% Fibo line. A stronger support would be at $1.015, the 138.2% Fibo line and a golden ratio.

Bought Hyflux and AIMS AMP Capital Industrial REIT.

My overnight buy order for Hyflux at $1.20 was filled. Looking at the daily chart, it is immediately clear why I put in a buy order at that level. It is support. Even with a confirmation of a reversal signal, we want to buy as close to support as possible. Of course, luck plays a part because in very bullish circumstances, price could have gapped up and gone higher.

A white hammer was formed again today as price moved marginally higher on the back of lower volume. It was a weak white candle day. Bulls seemed to be rather cautious as the weekend is always a wild card. If nothing untoward happens this weekend, price could resume its upward climb. Immediate resistance is at $1.28 in such an instance.

It would be interesting to see if price could rise as high as $1.39 which is where the declining 50dMA is approximating. Of course, in another few sessions, the 50dMA would be lower and a gap filling at $1.365 could prove to be a rather strong resistance.

Today, I also bought more AIMS AMP Capital Industrial REIT at 95c. This means a pre-consolidation price of 19c per unit. For long time unitholders, it would immediately look cheap. At that price, we are looking at a distribution yield of 10.5%. The fundamentals of the REIT have not deteriorated. Well, not that I know of. So, the weakness provided me a chance to increase exposure to the REIT.

Regular readers might remember that I divested a significant portion of my investment in this REIT and moved the funds to Sabana REIT to have equal weightage in these two industrial properties S-REITs. The only way to entice me to increase my investment in this REIT once more is to offer a meaningfully higher distribution yield, everything else remaining equal, and that happened today. So, you would see me accumulating on further weakness. 90c next?

Technnically, despite a spike in volume as price gapped down today, all that was formed at the end of the day was a doji. To me, that is an encouraging sign for long holders.

Julius Baer downgrades Hyflux to hold and cut its target price to $1.30 from $2.30. “We believe that Hyflux will face challenges in winning projects to catalyse its share price due to its current stretched balance sheet,” Julius Baer said in a report.

Friday, 02 December 2011

© 2011 - The Edge Singapore

Hyflux and Sound Global.

Regular readers know that I invested heavily in Hyflux Water Trust during the last crisis. I was drawn towards its very high distribution yield of some 17% and zero gearing at one stage as well as its very stable businesses. The Trust helped to grow my wealth significantly.

I continue to like the water business and believe that the world will continue to need solutions to water problems. In an earlier blog post, I said I would like to become an investor in Sound Global (the former E-pure) once again. Of course, I would also be interested in Hyflux. It is just a matter of finding an entry price I would be comfortable with.

If we look at Hyflux's chart, the downtrend is definitely intact. What interests me is the higher low on the MACD as its price formed a lower low. Yes, we have a positive divergence which is a reversal signal. What got me even more interested is that the white hammer formed yesterday was confirmed today as price opened and closed higher on the back of much greater volume.

I certainly do not know if Hyflux's share price has bottomed. It might be bottoming but we cannot call a bottom until it has formed. However, I might initiate a long position as a hedge and will not add to this initial position unless a clearer picture is seen.

Sound Global, on the other hand, is exhibiting more strength although it has come up against a significant resistance, it would seem.

As its downtrend is arguably intact, I am wary about initiating a long position when price looks like it could be testing the immediate resistance. So, for Sound Global, I will wait a bit more.

Hyflux secures funds of S$150m.

The Tuaspring desalination plant is part of a project expected to cost S$890 million, which the firm said it is "on track" to secure funds for this second tranche.

More fund raising exercises on the way, I think.

Related posts:
Hyflux: 6% perpetual Class A preference shares.
Hyflux: $800 million bridge loan.

Hyflux: $800 million bridge loan (UPDATED JULY 2018).

In 2011, I wished all Hyflux investors good luck.

Now, 2018, again, I wish them good luck because they need it more now than ever.

I have always been concerned by how Hyflux kept borrowing money (and why their cost of borrowing was always relatively high in an environment of very low interest rates).

I also said that I would not lend Hyflux any money.

Chat with a reader in Nov 2017.

Being a retiree, I feel sorry for the retirees who put in a lot of their money in Hyflux.

I just hope that they did not put all their eggs in the same basket.






A retiree wanted more updates on the divestment of the plant and what that means when the 4.25 per cent bonds that he had invested S$250,000 into mature this September.

“There isn’t a conclusion and everything still hinges on the sale of Tuaspring and at what price. But my investment is due in September and that’s what I’m most concerned about,” he told Channel NewsAsia.

“I’m retired so this was going to be a key part of my income but now, not just the income, I have to be worried about my capital. My kids are going to university soon so I have to figure another way out.” 

Source:
https://www.channelnewsasia.com/news/business/hyflux-shareholders-townhall-meet-management-first-time-10545662






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It was not so long ago that Hyflux offered $200 million of perpetual preference shares. 

At that time, I wondered why Hyflux had to pay a 6% annual dividend yield on those shares.

6% seemed a tad expensive to me in an environment where interest rates are very low. 

I concluded that Hyflux could be having some difficulty getting long term financing from financial institutions at even an interest rate of 6% per annum.

Now, Hyflux has approached a group of banks for a $800 million bridge loan. 



Bridge loans are usually short term in nature (i.e. not more than a year) and are usually perceived as lower risk and would attract a lower interest rate.






There is no question that Hyflux is a growth company and one with huge capital expenditure requirements. 

It could turn out very nicely for shareholders if its business chugs along as planned. 

Good luck to all shareholders.






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Hyflux said to approach banks for $800m bridge loan Wednesday, 01 June 2011

© 2011 - The Edge Singapore

Related post: 
Hyflux director divested all his shares!

Hyflux director divested all his shares!

Lee Joo Hai, a director of Hyflux, divested his shares completely at $2.18 per share in open market sale at own discretion on 15 April 2011. 

Total: 375,000 shares. 

As an insider, could he know something that we retail investors don't? Probably.





In my last blog post on the subject, I had mentioned that 

"the news that Hyflux is issuing preference shares with an annual dividend rate of 6% is somewhat surprising to me. In an environment of low interest rates, isn't paying a 6% interest a bit expensive? 

"It would only make sense to do this if borrowing from a financial institution would be costlier and it would only be costlier if the company and/or its business is perceived to be high risk."





Judging by how well the response is to the placement shares, which were 7x oversubscribed, I expect the ATMs to see long queues as people try to get their hands on some of these preference shares. 

Application closes on 20 April and the shares will start trading on 26 April. 

Good luck to those interested.

Related post:
Hyflux: 6% perpetual Class A preference shares.

Hyflux: 6% perpetual Class A preference shares.

I owned units in Hyflux Water Trust in the past. That investment did very well for me and, unfortunately, the Trust was privatised not too long ago. Read blog post here.

Back in 2009, I was also considering between Hyflux and E-pure as beneficiaries of a global search for solutions to water problems. I went with E-pure simply because of valuation reasons. I have no doubt that Hyflux is a strong company in a strong industry too except that its valuation has always been too rich for me.

However, the news that Hyflux is issuing preference shares with an annual dividend rate of 6% is somewhat surprising to me. In an environment of low interest rates, isn't paying a 6% interest a bit expensive? It would only make sense to do this if borrowing from a financial institution would be costlier and it would only be costlier if the company and/or its business is perceived to be high risk.

The only preference shares that I have ever owned is DBS NCPS 6%. This was something I bought 10 years ago. Intuitively, and we won't be too wrong to say this, DBS is less risky compared to Hyflux. Indeed, if DBS should default, I think that's the end for Singapore.

In a nutshell, if I were to invest in Hyflux, it would not be for income, it would be for growth. To invest for growth, I would not invest in Hyflux preference shares. To me, it is that simple.

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Hyflux to offer $200m of perpetual preference shares
Wednesday, 13 April 2011

© 2011 - The Edge Singapore