Stock Review: Hongkong Land Holdings

I have been eyeing on Hongkong Land Holdings for a long time, since the US$7-8 days. As property prices go up, up and away, I just look and drool, waiting for the opportunity. This year, the opportunity presented -- HK protestors wreck investor confidence, causing many HK shares to fall 10-20% in the past 6 months.

HK Economy

Normally, when you see a few cockroaches coming out of the kitchen, you know that there are a lot more to come, and we should expect volatile movements for an average of 1.5 years. At this point, my gut feel is that the protests are manifestations of deep underlying issues in how the society has divided the rich and poor. They don't have a wealth equalisation mechanism to uplife the poor, and the property-rich moguls control a lot of real estate and the government only provides rental housing for the really poorest of poor. Many younger workers "sandwiched" in-between are forced to buy either expensive property built by companies owned by these billionaires or rent from the many millionaires. If there are going to be any reforms, it will just be the beginning of a new era, and any equalisation will probably take a generation to take effect. In the meantime, the rich will just continue to get richer and for any aspiring investor, these billionaires are real examples of the effects of compounding. You can peek into forbes list of HK billionaires.

I am generally confident that property prices won't drastically fall suddenly because it takes a lot of stars to align for that to happen, but systemic issues can cause property prices to fall over 20 years, and this is the scary part, because you may not notice it, and by the time you notice it, you will realise that you didn't earn anything. The key metric I look at is population growth. Population growth is the main driver for economic growth. However, at a certain point, if the growth outpaces the infrastructure growth in the country, the country will be unable to support and will need to pause the growth, catch up in infrastructure (land expansion, utilities, transport, housing) investment, deal with a bit of oversupply issues, then let population grow again. You can see this being played out when you plot the growth rate over time.

In this chart, HK and Singapore's growth rate goes in cycles. Since 1997, HK's growth has been between 0-1%. I interpret it as infrastructure has been under stress to support the population for 20 years. How do we know if the government is doing its job in infrastructure investments to support population growth? I look at the population density metric.

In this chart, the year where the two lines crossed is 2007. When I see this, all things equal, I don't know what the future will be, but I can infer that the Singapore government is doing a lot more to support the population growth, i.e. chiefly land expansion. This also means that Singapore has a higher chance of over supply issue than HK. If you already hold properties in Singapore and HK, it's likely that the capital appreciation in HK is faster because the supply is increasing at a slower pace in HK. I won't want to invest in a Singapore residential property at the very least.

How all these can play out in an extreme scenario is where the poor in HK move to cheaper cities in China, much like how the poor leave the expensive cities in the bigger countries such as US and Canada. However, whether they get to live in more human conditions (as opposed to toilet-sized homes) is something I don't know because theoretically, they could have left HK to leave in a cheaper place, but they probably feel that HK is their home and refuse to move. Hypothetically, if HK had been a China all the while, the people would have behaved more like a US citizen shifting from expensive Manhattan to cheaper Texas, and still feel at home. In any case, expensive cities typically become more and more expensive over time. HK is a city, and not a country, so it's really not easy for their economy to crumble. On the flipside, an oversupply issue can be a massive drag on Singapore's economy.

Hongkong Land (HKL)

So I am confident of the HK economy, and I will get into the financials of HKL. HKL has 2 sources of income, rental (investment) and development sales. Development sales is something hard to value because income recognition will be lumpy, so I will not go too deep into it. I will just value the rental income aspect, and treat the development sales income as a bonus.

First, I want to know what's the proportion of "recurring investment income", so I will add the rental income and income from associates. This is the stable part of income that I know can be retained by the company or paid out as dividends.

In 1H2019 financial report  (page 11 of 21), rental and service income was US$509.6M + US$75.3M = US$584.9M. Operating profit for investments (rental) was US$482.6M. I deduce rental expenses to be 17.5% (1-482.6/584.9). In 1H2018, the equivilent was 19% (1-456.6/(484.1+76.4)). Associates contribute US$127.2M.

Recurring investment income for 6 mth = operating profit for investments + associates income - finance expense - operating costs
= 482.6M + 127.2M - 59.4M - 334M
= US$216.4M

as a % of profit before tax (page 5 of 21) = 216.4M/537.7M = 40%

In reality, the expenses will be lower because I took the whole figure, which include the costs for the development sales. There was no breakdown available in the financial report. This is a conservative calculation, but it means 40% of income is recurring in nature. Its income is also fairly stable as the vacancy rates are between 1-3%.

Next, I want to know if this income can sustain the dividends paid out.

Dividend paid out in 2018 = 16 cents/share = US$373.4M (page 14 of 21)
Recurring investment income for 12 mth - 17% corporate tax = 216.4M x 2 - 17% = US$359M.

17% is a conservative rate too. This should be lower as they will have deductibles. Debt to Equity is 9-10% which means dividends are not paid out of debt. I am inclined to believe that the dividends are sustainable.

Next, I want to know the Return on Asset, which is how much juice the company can squeeze out of its assets, which is like the yield on assets, or rental yield. Unfortunately, HKL doesn't publish its cost price, so we can't calculate a yield on cost.

Investment asset value = US$33,815.4M (page 7 of 21)
Associates asset value = US$7,152.5M
Total = US$40,967.9M
Net Return on Asset = 216.4M x 2 / 40,967.9M = 1%
Gross Return on Asset = (482.6M + 127.2M) x 2 / 40,967.9M = 3%
Gross Return on Asset (property only) = (482.6M) x 2 / 33,815.4M = 2.85%

The net Return on Asset is actually quite low, but this is not the real yield on cost, which should be lower especially if the properties were bought long ago. This is the yield based on current market value, so I interpret this as the properties market value are overvalued, because 1% is lower than safe bond rates of 1.5%-2%. If we assume property valuation to fall to a safe bond rate of 2%, this means we can expect the investment values to reduce by 50%. If we expect safe bond rates of 3%, we can expect the investment values to reduce by 33%.

Finally, I want to know the Price to Book value, but I want to be more conservative and calculate an adjusted book value, and not use the book value calculated by the company which uses current market values of their investment properties. I won't want to just apply a discount rate to the NAV because in the event of a market crash, the assets will half in value, but the loans will remain at 100% and won't be halved.

Net asset value (NAV) per share = US$16.50 (page 1 of 21)

NAV = US$38,529M (page 7 of 21)
Number of shares = 2,333.9M (page 13 of 21)
My adjusted NAV = US$38,529M - 50% of (investment properties, joint ventures, properties for sale) - debtors = US $38,529M - 50% x ($40,967.9M + $2,065.8M) - $985M  = US$16,027.15M
My adjusted NAV per share = US$6.87

Price to my adjusted NAV = 5.40/6.87 = 79% (i.e. 21% discount)
Price to unadjusted NAV = 5.40/16.50 = 33% (i.e. 67% discount)
[30 Oct Edit: Discounted joint ventures, properties for sale, debtors into the adjusted NAV to reduce the NAV further]

Valuation

If I assume a value buy to be at the cost of 60% of the asset values, the max price to buy is 60% of US$6.87 = US$4.12.

At last done price US$5.40, US$0.16 dividend = 0.16/5.40 = 3% yield

HKL will be an asset play as there is a discount. The % varies, depending on how you value their assets. The dividends are so-so, however if market depresses the market price further to US$4.12, all things equal, it turns into a dividend play at 4% yield, with a margin safety of -50% discount to market value for its investment assets.

The last done price was US$5.40, which is attractive enough for me, so I should be nibbling some in the coming week.

The writer does not hold shares in HKL.

Book Review: The Black Swan

After reading Fooled by Randomness, I decided to read The Black Swan, which was supposed to give more boring details of the black swan events. This book lived up to my expectations of a philosophical discourse on black swan events. There are many summaries of the book available on the internet, but reading the whole book is a totally different experience.

Afterthought 1: It is extremely important to differentiate linear and non-linear events when we are navigating our lives.

Many things we make decisions based on track record of a person, company, ourselves, weather, anything, but it's because we assume that events are linear. An example of an assumption of linear events is: this company has been consistently growing its business for the past 20 years, I believe that there is a system within the company, and competent management, and a critical mass of key executives who can continue to deliver good results. An example of a non-linear event that the company may face is a financial cover-up that even management wasn't aware, and a scandal can blow out of proportion, which just destroys all the good track record it had.

Afterthought 2: There may be just one benefit to have retired military generals as our country leaders.

Taleb, the author, wrote that the only profession he had met who really understood and protect themselves against black swans are the military leaders. All the others probably just acknowledge that black swans exist, but they are outliers and don't make any preparation to face them. The most extreme example he cited were professors in statistics/probability who continuously and religiously set aside monthly income to buy index funds, although they preach black swans and what not.

In the military context, everyday is a non-linear event. Just because you prepared yourself yesterday, does not mean that you will survive today. You could get killed by many random events which are beyond your control. Military leaders hence spend a lot a lot a lot to protect against the impact of black swans, relative to say a fund manager or hot shot trader who is paid fat bonuses but doesn't protect his customers from downsides (customers sign disclaimers that they bear the risks of lost in investments).

Of course, it's also a linear assumption that a retired military general will have the heart to protect the lives of citizens the same way as when he was in the military.

Afterthought 3: Risk is influenced by probability and impact. Many people focus on the probability and don't protect themselves against impact.

There are many instances people are contented with the work they don't think that there is anything wrong with it. For example, we may come up with an analytics model to identify the people who are at higher risks of being dishonest, and we put everybody through this model and tell ourselves if they pass, they are less risky, let our guard down, then one day be caught off guard by a crook who didn't appear as high risk in our model because we didnt factor his profile in the model.

The next time you hear someone tell you that it's so costly to subject 99.999% of passengers to pat down checks to guard against the 0.001% who may bomb a plane of passengers, you know that he isn't quite conversant with black swans.

What did I buy and sell between Nov 18 to Apr 19?

Another 6 months zoomed by... just because it's boring -- lack of great stock sales.

Nov 18 (and Dec)
SIA Engineering Bought SIA Engineering at $2.80 (Nov) and $2.40 (Dec). It dropped further to $2.20 (Dec) and I thought ok, buy again at $2 but it didn't thanks to the market floating all boats. I did my review on it too.

Dec 18
Singtel Bought more at $2.96. I didn't have the time to monitor the prices, so I just bought at whatever price it was at since it was bargain sales week (lowest was $2.80, but I thought since my last target entry price was $3, I will buy again at $2.70, which didn't hit). It's funny when you think back about the days you go shopping without really looking at the price tag.

Mar 19
Cache Log Trust and OUE H Trust I sold all of them both for the same reasons. I just didn't like that their debt is ever increasing, yield decreasing (because of units diluting the pool and/or falling rents).

First write-off and hopefully the last
The bad thing about buying shares is that you can lose money. The good thing about losing money in shares is that it doesn't hurt as bad as handing over cash to a person or seeing a deduction line item in your bank account statement, because the deduction happened some time back in history and you haven't seen that amount around for some time. I wrote-off $12+k in Hyflux preference shares. This event prompted me to review all my holdings to rid the ones with bad cash flow and I ended up selling Cache Log Trust and OUE H Trust. I am not touching unsecured bonds/preference shares until the next market crash resets all the balance sheets.

Autowealth rebalancing
Autowealth rebalanced itself in Dec 18 and Feb 19. In Dec, it sold europe ETF ($48) at a lower price than the purchase price ($59) to buy total stock market ETF at $120. In Feb 19, it sold the total stock market ETF ($140) and bought europe ETF at a higher price ($52) than it was sold in Dec ($48). Under normal circumstances, I wouldn't have sold in Dec 18, but would have just injected cash to buy more, which I did, but the rebalancing still kicked in! That's why it's called robo... you follow the algorithm strictly.

Some random and interesting observations

• Singapore Savings Bonds (SSB) has a portal (log in with Singpass) where you can view your combined cash and SRS SSB holdings. It made me wonder why they built it because we don't have a  combined CDP portal for cash stocks + SRS stocks.
• Boardroom sent me an email to notify me about their Annual General Meeting! I am so happy to see them stop sending snail mail.
• Just 6 months ago, I was looking at -8% portfolio loss. It's -1% now, which means my portfolio value increased 7%. The rate of increase is about half that of last year's.

Stock Review: SIA Engineering

SIA Engineering (SIAEC) is a company providing aircraft maintenance services. I have been a shareholder of SIAEC for a few years but I had not really read their financial reports in detail. There are 3 reasons why I bought their shares, in order of priority:

1. High barrier to entry -> Economic Moat
2. Very low staff turnover -> Human Capital Moat
3. No debt, net cash -> Financial Moat

Unfortunately, its share price had been falling ($5.10 in Jul 2014) and falling ($3.80 in Sep 2016) and falling ($2.90 in Nov 2018) and falling ($2.20 in Dec 2018)... now $2.40. I wonder if there are problems with my 3 reasons.

Economic Moat

Every quarter, SIAEC had been reporting decreased in revenue, due to new planes that require fewer (fewer engines (from 4 reduced to 2) and higher mileage between servicing intervals) and shorter (improve designs and technology) servicing, which is a good thing if you think about air travel as a whole, because planes are safer and turnaround times are shorter. This means that airlines with newer planes will spend less on maintenance, which is bad for SIAEC. The good thing for SIAEC is that there are also more planes now because planes have become cheaper to acquire and maintain.

While aircraft checks have become fewer and shorter, I believe that the complexity has increased. This is because software is likely the enabler for these hardware improvements. This means that a maintenance engineer has to also learn how the software controls the hardware, in addition to all the new planes and the constant software updates these planes receive. As the servicing interval is further apart and maintenance window shorter, a maintenance engineer also needs to have a lot more experience to rectify problems and also identify potential issues in a shorter duration. SIAEC is in a very specialised area of business and this gives it its economic moat. It's very unlikely you will see another competitor beyond the existing one -- ST Engineering -- which mainly deals with military aircraft maintenance.

As long as aircrafts are in use, there will be a demand for aircraft maintenance services. This moat should still exist for a while..

Human Capital Moat

Being so specialised, SIAEC will likely have recruitment issues because staff can only come from a similar aircraft maintenance company based outside of Singapore, ST Engineering, military, or university/polytechnic graduates. Salaries also need to be higher. The good thing is they have very low staff turnover of 2%. If you are an aircraft engineer seeking a job switch, then you either join the defence/aviation government agencies, or pre/post/sales teams of Boeing/Airbus/Rolls Royce/similar in Singapore, or leave Singapore to join a similar company elsewhere. The community is small.

At 2%, I think it's a very good indicator that their engineers are well looked after. This is very important because the quality of services delivered depends on them. The only risk is potentially retirees leaving over the next few years, but this risk is present in every company in Singapore, because of the baby boomers generation. It just has a greater impact for companies dealing with very specialised products and services.

SIAEC Annual Report 2017 Page 29

Financial Moat

SIAEC has no debt throughout the years, which is good, but you may wonder if they are overly stingy with investments (~$30M in capex and intangible assets, 3Q18, pg7). Unfortunately, it's not stated what these investing activities are, but we can guess that it is around robotics, automation, and new toys they are trying out. Their Dividends from investments ($85.7M, 3Q18 pg7) = 2 x Net cash from operating activites ($39.8M, 3Q18 pg6). (I am dreaming of the day where my dividend from investments = 2 x my employment income too...). These numbers suggest really frugal and long-term financial management, which is something I really like about them.

Valuation

Net profit margin was 14.6% for 9 months ending 31 Dec 2018, compared to 16% a year ago. This was calculated with profit attributable to owners of parent / revenue. To me, it's a close enough figure to show that they are keeping a close watch on expenses too. Usually for companies that rely on human capital to deliver services, drops in revenue eat into profit margins, so it's important that the margin isn't too lean (i.e. <5%) and doesn't change too much (i.e. >5%).

At $2.40, it is just a little higher than its historical low of $2.20 on 26 Dec 2018. A dividend of $0.12 may not be too much to ask for, although the market is likely pricing in a lower dividend of $0.10 (because historically, SIAEC's yield hovers around 4%).

To determine what price to buy at, you ask yourself how badly you want to buy, and how much margin of safety you want to have. Assuming a lower dividends gives you a higher safety margin. If you want it badly, you just buy regardless of the price, like what I did. And if you like it so much, you buy more every time the price falls 10%.

$2.40, $0.12 dividend = 5%
$2.40, $0.10 dividend = 4.1%
$2.20, $0.12 dividend = 5.4%
$2.20, $0.10 dividend = 4.5%

I may be blinded by my vested interest in SIAEC, but I still like their moats.

Stock Review: Hyflux's Restructure Plan to erase $3.3B unsecured debt

If you need a summary of the Hyflux re-organisation process, you can read the FAQs at Hyflux website and Q&A from Second Townhall Meeting with Holders of Perpetual Capital Securities and Preference Shares .

Key points extracted, words in square brackets added by me:

[Internal Factors:]

1. While the Group reported losses in 2017 for the first time in its history, it had also regularly kept the market abreast of its plans to divest the Tuaspring project as well as its discussions with potential strategic investors.
2. [Unsuccessful Tuaspring sale]

[External Factors:]

1. Tuaspring was the largest asset Hyflux has invested in. In line with the business model, Hyflux sought to divest Tuaspring about a year after the power plant started operations in March 2016. Unfortunately, at that time, the poor market conditions hindered the divestment efforts.
2. The oversupply of gas in the Singapore market resulted in depressed electricity prices which adversely impacted Tuaspring’s financial performance when it started operating. The average wholesale electricity price in 2016 (when Tuaspring power plant started operations) was at $63/MWh, compared to $220/MWh in 2011 (when the project was first awarded to Hyflux). [Main reason, like how certain US oil companies went bankrupt when oil prices fell 80% because they priced projects based on best case scenarios and were over leveraged.]

[Unsuccessful Tuaspring sale]

1. The effort to divest Tuaspring started in January 2017.
2. DBS and CICC Bank were appointed as advisors for the divestment exercise.
3. By August 2017, more than 50 parties had indicated an interest in Tuaspring and had been provided access to the information memorandum concerning Tuaspring following written approval to disclosure being received from PUB. This information memorandum provided high level information on the asset.
4. As a result of this exercise, the company received several preliminary non-binding bids, all of which were subject to agreement on the investment structure, regulatory and other approvals, and completion of detailed due diligence. Three of these indicative bids attributed an enterprise value of S$1.4 bn to the Tuaspring project. [Entreprise value isn't asset value; it's the sum of how much it will cost to buy over the plant.] These came from a PRC SOE, a private UAE party and a subsidiary of a Singapore listed company.
5. However, these numbers were not final but subject to various conditions, investment structures and further due diligence.
6. To conduct further due diligence (which required obtaining access to more confidential information relating to Tuaspring) and to make a binding offer, an interested party needed to be approved by PUB to be granted access to such confidential information.
7. By May 2018, none of these parties had completed their due diligence processes, and the time required to complete such due diligence and receive an offer was likely to take a much longer period of time. With the weak electricity market not likely to recover in the near term, the Group will continue to suffer losses. As such, Hyflux decided to commence a transparent financial reorganisation supervised by the High Court of the Republic of Singapore.
8. The effort to divest Tuaspring continued in July 2018 through a collaborative sale process with the sole secured bank lender, Maybank.
9. Of the parties that had expressed an interest previously, only 8 requested to be pre-qualified by PUB.
10. Of the 8 parties, only 2 local parties [Keppel Corp and Semb Corp] were pre-qualified by PUB, of which 1 submitted a conditional bid [Semb Corp] in early October 2018.
11. This conditional bid would have been insufficient to repay Maybank. [Maybank's loan = $700M ]
12. Maybank agreed to extend the relevant deadlines for the collaborative sale process but to-date no further offer has been received from the other pre-qualified local party.
13. No further request for pre-qualification has been made by any other interested party nor have any other offers been received.
14. The Board is duty-bound to consider any offer that is made and compare that against the proposed investment by SMI.
15. At present, the best option in all the circumstances, is the proposed investment by SMI. Before the scheme meeting on the proposed investment at the end of March 2019, the Board will consider any better offer that is received. To-date no other offers have been made.
16. Please also refer to the SGX announcement issued by Hyflux on 28 January 2019 regarding the Tuaspring sale process and related news reports: http://investors.hyflux.com/newsroom/20190128_161822_600_P8YLNZWOKM8HC60B.1.pdf

How I read all these

How much unsecured debt is there? S$2.6B for Hyflux Ltd only or $3.3B including subsidiaries

Read the Scheme document for Hyflux Ltd Creditors. Summation is my own as the total isn't stated.

Items #1 to #5 appear in the financial statement Balance Sheet as Liabilities, $1.65B.

Items #6 to #7 appear in the financial statement Balance Sheet as Equities, aka off-balance-sheet-liabilities $1.8B.

1. $572.1M - Facilities
2. $136M - KfW
3. $265M - Notes Series 8,9,10
4. $668.1M - Contingent
5. $11.3M - Other Trade Creditors
6. $500M - Perpetual Capital Securities @6%
7. $400M - Preference Shares @8%
8. $72.3M - Subordinated Scheme

Page 193 states how $3.3B debt will be erased with SM Investments's $400M. Debt from the other 3 subsidiaries are stated too. That's 88% of debt magically disappearing from the books.

1. Olivia Lum Volunteers To Contribute Her Entire Stake Of 267 Million Hyflux Shares And Securities Solely To The Other Holders Of Perpetual Capital Securities And Preference Shares As Part Of Restructuring Plan --> She could have also done this by selling Tuaspring to Semb Corp at say $530M too.
2. Hyflux was following Singapore government’s instructions to prepare for 8 million population and industrial expansion. --> This means that Tuaspring isn't operating at full capacity, however, we have no visibility on the % utilisation, something like occupancy rate of a building you rent out.
3. Maybank holds the secured debt backed by tuaspring at a value of $700M. They have the best bargaining powers now. --> Maybank still has hope to get back $700M because they are not part of the restructure plan.
4. Tuaspring is operating at a $70M loss in 2016 (Hyflux response to SIAS letter Page 12, Q17) based on last audited accounts. In the restructure plan, nothing is mentioned about this, but we know that an indonesian tycoon will own 60% of it and ALL other Hyflux assets with $0 liabilities (because all will be written off)at a steal -- just $400M! Equivilantly valuing all assets at $400M / 60% = $667M.

1Q2018 Financial Reports

1. Based on 1Q2018 reported $24M loss, Earnings Per Share was -4.53 cents (-1.82 cents in 1Q2017), or -1.57 cents (1.6 cents in 1Q2017) excluding Tuaspring. Based on 785M shares, Tuaspring's 1Q2018 loss was -2.96 cents/share (-3.43 cents in 1Q2017) or $23M ($27M in 1Q2017).
2. $3.6B assets of which tuaspring is under asset-held-for-sale at $1.47B, $2.6B liabilities (of which $0.56B belongs to tuaspring).

Salim Smart

This is an awesome deal for SM Investments to own 60% of Tuaspring at a fraction of Semb Corp's offer. He deserves to be a tycoon. Assuming Semb Corp paid $530M, including $560M of liabilities, it would have paid $1.09B.

For Hyflux shareholders, the 785M units will be diluted 25 times. I hope I am interpreting this correctly from Page 193, that post re-org, ordinary shareholders own 4%. This also means that there will be approximately 785M x 25 = 19.625B units without shares consolidation.

In terms of paper value for 1 unit of Hyflux share post re-org, it's 3.4 cents ($667M / 19.685B units). Based on last traded price of 21 cents in May 2018, it's -84%.

For Perpetual Capital Securities or Preference Shares holders, not Hyflux shareholders, for every $1 owed to you, Hyflux will return you 10% in the form of 3 cents cash + 2.26 units of Hyflux shares (assuming 19.625B base, 19.625B x 10.38% / 900M = 2.26 units) supposedly worth 7.69 cents. If you have 10 units of shares (or $100/unit x 10 units = $1,000 worth), the restructure offer is to redeem your 10 units at $30 cash + 2260 units of Hyflux shares worth $76.90 instead of $1,000 cash.

Is there a better way out?

If I have the answer, I will probably be an investment banker, and not a nobody writing stock reviews? Here are my thoughts:

Firstly, Tuaspring's asset value should not have been stated as $1.47B. It should have been $1.47B - $0.56B = $0.91B. This can quite misleading in various contexts.

Secondly, the interest payments are suffocating. Although the interest rate for the bank debts were not stated, but we can assume it to be 5%, a bit lower than the 6% paid to retail investors, because usually banks aren't willing to lend, hence seek retail investors. 

If the $3.5B debt is re-negotiated

@5% = $175M/year

@2% = $70M/year

Personally, I think re-negotiating the debt @2% is one option, while they work on making Tuaspring profitable and then selling it off. Given the current stand-off situation, even if Hyflux offers @0%, I bet many creditors will choose 0% over the 10% redemption offer, similar to what Maybank is doing, hope for gas prices to go back up. 

Thirdly, if there is synergy between Tuaspring and Salim's businesses, then work on partnership deals to improve its profitability. I am not a Tuaspring expert, but minimally, I will think that scaling down operations is one way to cut cost. In addition, gas prices have fallen by two-thirds, so it won't be too unreasonable to re-negotiate the concessions with the government? I don't know.

The writer owns 130 units of Hyflux Preference Shares.