Tuesday, January 13, 2015

Analysis of Hyflux 6% CPS 10

  • Current Price on 8th Jan 2015 = S$106.05
  • Interest = S$6.00 per share
  • Yield = 5.618%
  • Credit Rating = None
Investment till Callable Date
  • Tenure = 3.5 years
  • Total Interest = $21 per share
  • Capital Loss = $6.05
  • Overall Return = $14.05
  • Overall Annual Yield = 4.028%
Hyflux Preference Shares was one of my holdings when I first have my cash reserves. With an interest of 5.618%, it is one of the best in SGX which is S$ denominated. (Olam is better but it is US$). However, it is priced at 6% premium which is tricky. Therefore, the overall return will be only 4.028% if it is held till maturity.

My strategy would be to use this as a one-year bond. That means to purchase it now, earn 5.6% interest, pay about 0.50% transaction cost (which means a net of 5.1% return) and sell it after 12 months. Of course, there is a risk that its price will drop but with a historical fluctuation of 3%, it is worth a try.

Increasingly, I am setting some of my criteria. One of which is that it needs to have a remaining tenure of at least 3 years to provide some price stability to it.

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