I came to know about Hyflux four or five years back when there was a write up on its founder, Olivia Lum, highly successful Malaysian entrepreneur. Grown up as an orphan in a small town Kampar, Perak, to whom she is and what she has achieved so far, her story is inspiring (you can find it here).
After reading about Olivia Lum and Hyflux, I was tempted to invest in the company then based on the followings:-
1) lead and managed by highly capable founder, who has proven track record to build business
2) with great support by Singapore government as it is seen as a highly successful Singapore grown enterprise that made it to international level
3) it is in water and energy sector - a sustainable business
4) it has been paying consistent dividend since 2003 till 2016
5) the company is expanding into other countries rapidly( highly leveraged on gearing), with very high growth potential
However, there was one area - its debt level, pulled me back from investing in Hyflux.
Due to the one factor, I have avoided a big surprise from Hyflux ( though in some cases eg Air Asia, yes, I have missed some that have multi fold returns too, but it is ok). Ever since the Asia financial crisis where I have witnessed what happened to some highly geared Malaysian companies went into serious financial problem, I have distant myself from highly geared companies no matter how promising the future of its business appears to be.
What happened to Hyflux once again reinforced my own belief, avoid highly geared companies no matter what other positives are there, they can't compensate for the high risk of bankruptcy.
In our investment journey, we are bound to make some really great investment and some bad investment too. As long as we did not make a bad investment that cause a big dent in our ship, the sailing journey will continue though it may be slow down by storm once a while. A big dent could cost the ship sink and our journey may end before we could even enjoy it.
.png)
No comments:
Post a Comment