Penguin International

For me, payout ratio between 15% to 50% is good for a growth company instead of > 50%.

Margins also look good: GPM 34%, NPM 18%
ROE: 22%

Looks like speculations before posted here that Penguin is not affected by O&G downturn are just speculations. Company has spoken, O&G downturn does affect earnings.

If O&G downturn continues, EPS may go downhill. In such an event, dividend will likely be cut and PE will go up very quickly. Growth may slow down as expansion limited by "market factors"

Given O&G downturn, MOS might need that to be even more than before. Don't see that yet at current prices.

Said it before and will say it again, "where is the MOS?"

(25-02-2015, 08:10 PM)NTL Wrote: How you all be interpreting the following statement? Positive? Negative? Or Neutral Outlook?

"Sobering sentiments in the offshore oil and gas industry are expected to temper demand for the Group's crewboats and Fast Supply Intervention Vessels in sales and charters. However, demand for security vessels (Flex Fighter) and passenger ferries (Flex Ferry), as well as ship repair services, is expected to be less affected."

I am interpreting as offshore biz growth will be tempered, but marine biz will be unaffected. It means the growth continue, but may need to lower the rate going forward

(vested)

I welcome the increase in dividends payment. Last year, when all things are firing, they remain conservative in their dividends payment. This year, they decided to increase the pay out even when they knew that its crew boat and FSIV will be affected by the O&G slowdown. This is a positive sign to me.

(25-02-2015, 08:28 PM)BlueKelah Wrote: Looks like speculations before posted here that Penguin is not affected by O&G downturn are just speculations. Company has spoken, O&G downturn does affect earnings.

If O&G downturn continues, EPS may go downhill. In such an event, dividend will likely be cut and PE will go up very quickly. Growth may slow down as expansion limited by "market factors"

Given O&G downturn, MOS might need that to be even more than before. Don't see that yet at current prices.

Said it before and will say it again, "where is the MOS?"

The "affect" is the next 12 months forward-looking statement by the management. I am not surprised, with the prudent management

I am yet to look in detail of the report. The FY2014 performance may not be affected too much by the "oil" price, but mainly by higher expenses. Let's discuss in detail, once I finalized the view.

At a glance, the biz growth rate seem more and less unaffected, and the future growth will remains, with the inventories numbers.

Where is the MOS? How about a growing company with double-digit rate, but PE stays around 5, and cash rich, no debt, and current dividend yield of 5%? I am taking it as a sufficient MOS.

(vested)

Have to agree with BlueKelah here. I personally don't see much upside at current prices and there is higher potential of downside should the downturn hit harder than expected. That being said, the balance sheet should help to limit the downside (if any).

The negative as most have pointed out is the weaker Q4 data and the muted forward statement given by the mgmt. Going forward, it is likely next year EPS will be slightly lower maybe by 20%. What surprises me is the sudden increase in inventories which means likely a strong boat building revenue for one or two more quarters. Hopefully inventories will decrease leading to positive cashflow.

What is positive is the increasing business in Africa, and the lower proportion of internal sales on the back of increasing revenue. the 1 cent dividend is expected as the PPE outflow for next FY is going to be much lower than the 20M this year. on the back of 5x P/E, it is a very conservative number even if earnings decrease by 20%. The free cash flow generated should be about 20M next year due to lower CAPEX and based on the poor Q4 quarter which generated 8.4M (ignoring working capital changes)

Indeed, and as expected, Penguin has posted a set of very good full-year numbers for FY14 including record profits together with much improved margins…..
http://infopub.sgx.com/FileOpen/Penguin_...eID=336087
The declared total $0.01/share in final/special dividends - a 100% increase! - is a nice reward to shareholders.

A relevant question to ask: Is the record profit in FY14 an exception and therefore it is unlikely to be repeated?

From the Segmented Results, we know:
(1) Ferry & Chartering Services division posted a small 7.3% YoY increase in Revenue to $27.404m, but division PBT increased 126% YoY to $7.997m, and after adding depreciation of $7.008m pretax FCF (before capex) posted a 43.6% YoY increase to $15.005m, which is more than the $13.767m spent on non-current assets (presumably 3 new crew boats by my guess), partly funded by $9.931m (extracted from Cash Flow Statement) in proceeds from disposal of PPE presumably older vessels with a total realised gain of $3.391m (extracted from Notes to Income Statement). As chartering contracts are usually term contracts, it looks like there is still room for further profit increase for Penguin's fully self-funded ferry and crew boat charter fleet.

(2) Shipbuilding & Repair division posted a slightly higher PBT Margin of 18.8% (vs. 18.7% in FY13) on a sharp 39.2%% YoY increase in Total Revenue to $159.288m (including $21.846m of Inter-Segment Sales, presumably related to new crew boats built for and transferred to Ferry & Chartering division, and recurrent repair & maintenance carried out on the group's charter fleet). Division PBT increased sharply by 39.4% YoY to $29.887m. If we deduct from this figure the full $6.466m imputed inter-segment PBT (extracted from the Adjustments & Eliminations column), this fully self-funded division's adjusted PBT of $23.421m derived from sales to external customers, which increased 62.1% YoY to $137.442m, also posted a sharp 50.5% YoY increase and a healthy PBT Margin of 17% (vs. 18.3% in FY13). We know future profits from this division depend squarely on new boat orders. Based on the high inventories balance (mainly refers to uncompleted vessels under construction) of $56.777m, and the high other payables and accruals balance (which includes advance payments and deposits received on new vessels on order) of $36.785m, it does appear that building activities in Penguin's 2 yards and vessel deliveries would continue at a brisk pace into FY2015.

Can we therefore say the best is yet to be for Penguin?

I have a tiny stake in Penguin. I see Penguin much on its prospect rather than it's NAV, so to me MOS is not really important. I am hoping and expecting wider recognition on its crew boats, dividen wise we see something special this year, but such special may not be available every year because it is called special.

So I believe in the long-term, the company still has a good prospect ?