Cory Diary : Intelligence comes with responsibility

The Saga of Hyflux has been burning for quite some period of time. As usual when something like such in trouble, investor community especially retirees will be affected. Unlike HPH Tr, Sabana Reit, Noble or S-Chips, listed Hyflux do produces Power other than Water to the Public both tied to basic essentials for our Island State survivals.

However every time when I hear someone vested in Hyflux Preference Shares or Stocks they have the mentality that Ah Gong will not let it fails and that due to it's necessity, the investment will not go wrong. And this is where most investors could precisely get it wrong. Being essential does not mean it can't go bust as a listed company.

When I Invest in Hyflux Preference shares previously, I do stress out that it can go bust. In the end, I decided to cut loss to de-risk myself from it. Fortunately, manage to do it with really minimal impact of kopi size money. And this has been my strategy consistently. For historical view, I have avoided big or limited impacts from Sabana, Hyflux PS, Design Studio, Ouhua, Koda, MTQ, MunSiong, QAF, Starhub, SoilbuildBiz Reit, and the lists go on. Most successfully with just a few 5 digits losses.

How does all this got to do with my Diary you may say ?

Here's the article from BT.

https://www.businesstimes.com.sg/energy-commodities/power-generation-sector-crushed-by-massive-overcapacity

Not surprisingly, people starts questioning why our electricity prices did not comes down over the years ? And then we hear anti-government rhetoric starting out. Firstly of all we need to understand that this is written by journalist and with all well intention, could never be able to consider every angle of public opinions. They are humans not robots. And is up to the maturity of the public to derive their own perspective after reading it which we will surprise ourselves too that being highly educated, investment savvy and professionally experienced, we could get into wrong conclusion. And that's the power of media.

Here's the table of USEP prices.

If we care to look into the detail, the peak is even higher at 263. Interesting 2005 and 2018 are at the lower ends generally. This is across 13 years ! So trying to derive from BT reporting and link it to why we are not paying lower price is not that straight forward. The general average is around 140 so who is paying for them when the prices are high in 2007, 2009 to 2013 ? And if we consider inflation and cost to manage the overall, how will this works out ? 

I would expect prices to go higher with inflation but it doesn't ! One thing for sure there is some mechanism and buffering in-place to keep them as stable as possible but don't kid ourselves in that if the suppliers have not face stiff competitions, our electrical prices would not have rocketed to the moon. Hyflux probably has done a huge national service but I am not sure everyone appreciate Olivia works. In national level perspective, is certainly safer to be on over supply to lower our living cost. 

Before I sign off. Intelligence comes with responsibility. Not to throw oil into fire. Investors in Hyflux suffers enough so don't aggravated their suffering longer. Teach them to realize their mistake and how to invest better would certainly help. Be a part of the change.

Cory

2019-0216