Penguin International

(16-03-2015, 11:28 PM)valuebuddies Wrote: sorry to sidetrack a bit, how do you see the counterparty name actually? I trade via SCB and I won't see who is the otherside right?

You won't get this info through SCB platform. They are cheap for many reasons.

Their cost is definitely lower than 22. They might have accumulate it while it was on its way up from 10+ cents They have been playing for quite some time. Everyday they can trade just with 1 bid difference and multipy it with a few hundred lots. That's good kopi money. After the 4q result was out the faithfuls was out to defend the share price which bb was happily selling it. Now question is how much $$$firepower does the faithfuls have.

(17-03-2015, 07:41 AM)Bibi Wrote:

(17-03-2015, 07:23 AM)Behappyalways Wrote: Correct me if I am wrong. I was monitoring this counter for study sake and my take was that there was a bb in this counter. He was kinda buying 22 and selling 225. Not bad for a trade. That's why the counter has been range bound. The drop recently could be that the bb is out of this counter.

The 4q result is not as bad as reported but it might signal a trend. For those who took last year eps as a gauge might need to revise the eps. My two cents worth is to wait for 1q result before making any more investment.
By then you can see the earnings trend. I waited for 3 quarters before i am confident that Samudera has turned around. For safety sake it is worth the wait.

not vested.

What aa bb i think all bullshit. Why dont u say this bb bought at 22 and waiting to sell at 225 but end up the share price drop to 21 so he cut loss and dump to below 20?

If fundamental dont tell u anything then look at the charts. It has cut below both 50 and 200?? moving averages.

The market is full of traders and punters. They will buy, cut loss, take profit or shot counters just by looking at charts.

Given that the market is forward looking, my guess is the share price is trending down in anticipation of poor/poorer results in Q1.

The downtrend will likely persist in my opinion until release of Q1 results and should the results surprise on the upside, then I believe the upward momentum will turn.

In the meantime, I personally don't see any catalyst for Penguin to warrant an upward trend.

It would be good to attend their AGM to get a sensing of business prospects and how the oil price downturn has affected Penguin directly from Management itself.

I think I am beginning to realize the worry some have of Penguin.

Penguin recognizes its revenue in about 6-9 months after receiving the orders. This mean any short term depreciation of SGD against the Euro/SGD has an effect on Penguin's profitability. Since Penguin hedges its foreign currency revenue, the profit margins of its boat order in a particular quarter will decrease/increase in tandem with the currency movement.

Secondly is the outlook of the oil market. Due to positive oil outlook initially, Penguin received many orders and would of course hedge the foreign currency risk. Due to that, Penguin's Profit margin is likely to fall over the next few quarters as SGD deprecate against USD/Euro. The main reason is SGD need not be kept so strong due to lower oil prices in USD. However, with global oil outlook being poor, it is likely penguin's revenue will fall and this means less hedging of the FCY is needed over the next few quarters. However, if oil prices were to rise, it is likely SGD will appreciate to mitigate the rise in oil prices. Due to the lesser amount of hedging arising from lower orders, it is likely Penguin will obtain less forex gain than the initial forex loss. This is just my thought.

Nevertheless, I have accumulated some penguin stocks today at 0.198.

(17-03-2015, 09:17 PM)CY09 Wrote: I think I am beginning to realize the worry some have of Penguin.

Penguin recognizes its revenue in about 6-9 months after receiving the orders. This mean any short term depreciation of SGD against the Euro/SGD has an effect on Penguin's profitability. Since Penguin hedges its foreign currency revenue, the profit margins of its boat order in a particular quarter will decrease/increase in tandem with the currency movement.

Secondly is the outlook of the oil market. Due to positive oil outlook initially, Penguin received many orders and would of course hedge the foreign currency risk. Due to that, Penguin's Profit margin is likely to fall over the next few quarters as SGD deprecate against USD/Euro. The main reason is SGD need not be kept so strong due to lower oil prices in USD. However, with global oil outlook being poor, it is likely penguin's revenue will fall and this means less hedging of the FCY is needed over the next few quarters. However, if oil prices were to rise, it is likely SGD will appreciate to mitigate the rise in oil prices. Due to the lesser amount of hedging arising from lower orders, it is likely Penguin will obtain less forex gain than the initial forex loss. This is just my thought.

Nevertheless, I have accumulated some penguin stocks today at 0.198.

The hedging gain/loss should be balanced out in due course. I foresee a gain of $2.4 mil to offset the derivation liability in balance sheet, probably within next 2 quarters.

The hedging is to minimize the impact of the foreign currencies, on (gross) profit margin, right? I don't see the logic that hedging will affect the (gross) profit margin?

(vested)

(17-03-2015, 09:17 PM)CY09 Wrote: Penguin recognizes its revenue in about 6-9 months after receiving the orders. This mean any short term depreciation of SGD against the Euro/SGD has an effect on Penguin's profitability. Since Penguin hedges its foreign currency revenue, the profit margins of its boat order in a particular quarter will decrease/increase in tandem with the currency.

Why short term recognition of revenue is not good? At least they can adjust their prices far quicker than ,say, Keppel, where the contracts are only fulfill in 2-3yrs time. Keppel will need to hedge better against currency movement than Penguin, isn't it? Furthermore, isn't short term hedging cheaper than long term hedge?

To me, hedging is a double-edged sword, sometime it swing to your advantage, sometime the other way. So for some companies, like ASL, I don't think they even hedge.

(17-03-2015, 09:51 PM)NTL Wrote:

(17-03-2015, 09:17 PM)CY09 Wrote: Penguin recognizes its revenue in about 6-9 months after receiving the orders. This mean any short term depreciation of SGD against the Euro/SGD has an effect on Penguin's profitability. Since Penguin hedges its foreign currency revenue, the profit margins of its boat order in a particular quarter will decrease/increase in tandem with the currency.

Why short term recognition of revenue is not good? At least they can adjust their prices far quicker than ,say, Keppel, where the contracts are only fulfill in 2-3yrs time. Keppel will need to hedge better against currency movement than Penguin, isn't it? Furthermore, isn't short term hedging cheaper than long term hedge?

To me, hedging is a double-edged sword, sometime it swing to your advantage, sometime the other way. So for some companies, like ASL, I don't think they even hedge.

Currency hedging is to reduce the likelihood of the result of an investment being affected by currency movement.

Basically when you signed the contract and the profit is $1, you hedge to make sure the final profit is kept as close to $1, no matter the currency rises/falls, provided the hedge was done correctly.

The hedge is to offset currency gain/loss and the final profit will still be about $1.

Perhaps some can help to raise the question in AGM regarding the company hedging policies. Since some of Penguin cost of production are in foreign currencies, they should have hedge the expected non-functional currency COGS as well? Plus, any hedging on its AR/AP that were denominated in EUR/USD?

(17-03-2015, 10:26 PM)kopihothot Wrote:

(17-03-2015, 09:51 PM)NTL Wrote:

(17-03-2015, 09:17 PM)CY09 Wrote: Penguin recognizes its revenue in about 6-9 months after receiving the orders. This mean any short term depreciation of SGD against the Euro/SGD has an effect on Penguin's profitability. Since Penguin hedges its foreign currency revenue, the profit margins of its boat order in a particular quarter will decrease/increase in tandem with the currency.

Why short term recognition of revenue is not good? At least they can adjust their prices far quicker than ,say, Keppel, where the contracts are only fulfill in 2-3yrs time. Keppel will need to hedge better against currency movement than Penguin, isn't it? Furthermore, isn't short term hedging cheaper than long term hedge?

To me, hedging is a double-edged sword, sometime it swing to your advantage, sometime the other way. So for some companies, like ASL, I don't think they even hedge.

Currency hedging is to reduce the likelihood of the result of an investment being affected by currency movement.

Basically when you signed the contract and the profit is $1, you hedge to make sure the final profit is kept as close to $1, no matter the currency rises/falls, provided the hedge was done correctly.

The hedge is to offset currency gain/loss and the final profit will still be about $1.

1. It depends on the % of the expected contractual revenue/ profits hedged; typically firms do not hedge 100% as hedging costs could be expensive

2. Final profit will not be $1 -> must also account for hedging costs

(15-03-2015, 11:46 AM)bear Wrote: I have reviewed FY2013 AR again.Regarding the section on 37.Risk Management objectives and policies.The sensitivity analysis for foreign currency risk assumed not only based on the strengthening/weakening of USD/SGD,but also EUR/SGD as some of Penguin's sales transactions are denominated in EUR.Besides a (decrease) in profits for a strengthening in USD against SGD,a weakened EUR against SGD will result in a further (decrease) in profits as well.Having witnessed a continued weakening of the EUR dollar across the past 1 year period,it is not surprisingly that the forex loss are significant as both EUR/SGD and USD/SGD trend go against the group profit.Interestingly the group's net profit/loss sensitivity to EUR/SGD is higher as compared to USD/SGD.

Scenario
USD/SGD – strengthened 3% (2012: 3%) (95)
USD/SGD – weakened 3% (2012: 3%) 95
EUR/SGD – strengthened 3% (2012: 3%) 154
EUR/SGD – weakened 3% (2012: 3%) (154)

Hi bear, thank for your post, which prompt me to look deeper.

Noted that AR 2009, 2010, 2012 presented the same direction of the financial impact as AR 2013. But AR 2008 and 2011 shown a complete opposite impact. Given the same business model, which is correct?

Based on my understanding, the foreign currencies are mainly USD (for sales) and Euro (for purchase). A strengthening in USD should be favourable (higher profit) as it yield higher SGD equivalent sales and a strengthening in Euro should be negative as it resulted in higher SGD equivalent COS. The financial impact should be exactly the opposite of what is presented in the AR 2013.

PS: This note to accounts is to demonstrate the sensitivity to a possible change in foreign currencies movement. Given the management do perform hedging, the resultant financial impact will be reduced.

Above is my interpretation, just sharing with fellow VB. Please correct me if I am wrong.