Penguin International

(20-03-2015, 07:04 AM)new-comer1 Wrote: In a nutshell, what is the issue? Oil?

My vote is mostly Fear, partly Oil...

(vested)

(25-02-2015, 10:04 PM)CityFarmer Wrote:

(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)

Growth does not provide margin of safety, growth is projected and can come to a grinding halt just like that. Besides penguin is small cap in niche industry and can get hit by downturn which growth may evaporate. They do not have special cutting edge tech like electric or solar powered boat.

PE 5 should not be considered MOS as earnings and business can fluctuate a lot.

Cash rich and no debt show strong balance sheet not MOS.

Yield is only 5% this past year. Historically div payout has been very poor and of course no div payout policy.

And at around 24c levels when commented there was no MOS, was trading at NAV.

Now at sub 20c level it is starting to look slightly more attractive but since market seems to be marking it to oil price, it might only be worth it to start nibbling a little rather than catch a falling knife. Would wait till volume shrinks more and not much interest to vest. looking at the price action this seems to be a very speculative stock which should be purchased at 50cents on the dollar, which when dydx first highlighted before at 10c level was pretty spot on.


sent from my Galaxy Tab S

(20-03-2015, 11:10 AM)BlueKelah Wrote: Growth does not provide margin of safety, growth is projected and can come to a grinding halt just like that. Besides penguin is small cap in niche industry and can get hit by downturn which growth may evaporate. They do not have special cutting edge tech like electric or solar powered boat.

PE 5 should not be considered MOS as earnings and business can fluctuate a lot.

Cash rich and no debt show strong balance sheet not MOS.

Yield is only 5% this past year. Historically div payout has been very poor and of course no div payout policy.

And at around 24c levels when commented there was no MOS, was trading at NAV.

Now at sub 20c level it is starting to look slightly more attractive but since market seems to be marking it to oil price, it might only be worth it to start nibbling a little rather than catch a falling knife. Would wait till volume shrinks more and not much interest to vest. looking at the price action this seems to be a very speculative stock which should be purchased at 50cents on the dollar, which when dydx first highlighted before at 10c level was pretty spot on.


sent from my Galaxy Tab S

For those taking PB only for valuation, MOS means only discount to NAV.

For those taking earning for valuation, PE 5 mean 20%+5% earning yield, includes the dividend yield, is a MOS. It applies to me. Strong balance sheet is a MOS, unless you are hinting that the cash isn't real.

(20-03-2015, 11:37 AM)CityFarmer Wrote:

(20-03-2015, 11:10 AM)BlueKelah Wrote: Growth does not provide margin of safety, growth is projected and can come to a grinding halt just like that. Besides penguin is small cap in niche industry and can get hit by downturn which growth may evaporate. They do not have special cutting edge tech like electric or solar powered boat.

PE 5 should not be considered MOS as earnings and business can fluctuate a lot.

Cash rich and no debt show strong balance sheet not MOS.

Yield is only 5% this past year. Historically div payout has been very poor and of course no div payout policy.

And at around 24c levels when commented there was no MOS, was trading at NAV.

Now at sub 20c level it is starting to look slightly more attractive but since market seems to be marking it to oil price, it might only be worth it to start nibbling a little rather than catch a falling knife. Would wait till volume shrinks more and not much interest to vest. looking at the price action this seems to be a very speculative stock which should be purchased at 50cents on the dollar, which when dydx first highlighted before at 10c level was pretty spot on.


sent from my Galaxy Tab S

For those taking PB only for valuation, MOS means only discount to NAV.

For those taking earning for valuation, PE 5 mean 20%+5% earning yield, includes the dividend yield, is a MOS. It applies to me. Strong balance sheet is a MOS, unless you are hinting that the cash isn't real.

Penguin was in bad patch for the past years. Only after recent reforms that they begin to do better. Is it simply due to the generally global economy? Or isit that they finally go in the right direction?

On oil prices affecting the industries I'm getting mixed signal from people on the field (means small sample size. Error expected). It's very close to gossip with no foundations but let's share some views.

What happen to oil and gas industry when the oil price fall?

On one camp, bad. A friend working in one of the rig builders is looking for job as "everyone is expecting lower bonus". Yes order book is still good but workers started to feel bad, and started to see actual cost cutting. This means it's bad for the "investing" part of the oil company. Personally, my Asia Enterprise Holdings is telling me that there's reduction in oil and gas activities.

On the other hand, coffee shop talk with economy major. There's a chance that productivity would actually forced to increase due to lower oil price. The sunk cost is gigantic. To produce extral barrels is marginal cost.
When oil price fall, they still have interest to pay - which means, they need to produce more to pay the same amount of interest due to reduced margin. This is probably why established oil producing facilities refuse to cut down production - some simply can't afford to reduce production. On the other hand, those that have already paid off the debts, $40 dollars a barrel is still making money and there's no reason to cut. Yes, maybe can reduce production and increase again when the price is higher. However, this is a good chance to kill off some players, even getting M&A. Also, there's a depreciation part of the rig, and service contracts that has to be taken care of vs how much, extra, money that can be made from hording the resources for a year.
This means, reducing oil price might be good for the service part of the oil and gas industry.

(20-03-2015, 11:37 AM)CityFarmer Wrote:

(20-03-2015, 11:10 AM)BlueKelah Wrote: Growth does not provide margin of safety, growth is projected and can come to a grinding halt just like that. Besides penguin is small cap in niche industry and can get hit by downturn which growth may evaporate. They do not have special cutting edge tech like electric or solar powered boat.

PE 5 should not be considered MOS as earnings and business can fluctuate a lot.

Cash rich and no debt show strong balance sheet not MOS.

Yield is only 5% this past year. Historically div payout has been very poor and of course no div payout policy.

And at around 24c levels when commented there was no MOS, was trading at NAV.

Now at sub 20c level it is starting to look slightly more attractive but since market seems to be marking it to oil price, it might only be worth it to start nibbling a little rather than catch a falling knife. Would wait till volume shrinks more and not much interest to vest. looking at the price action this seems to be a very speculative stock which should be purchased at 50cents on the dollar, which when dydx first highlighted before at 10c level was pretty spot on.


sent from my Galaxy Tab S

For those taking PB only for valuation, MOS means only discount to NAV.

For those taking earning for valuation, PE 5 mean 20%+5% earning yield, includes the dividend yield, is a MOS. It applies to me. Strong balance sheet is a MOS, unless you are hinting that the cash isn't real.

My green opinion on PE or PB as valuation.
PE 5 = 20% yield (+ dividend yield) is based on the assumption that such earning is reproducible. In fact, PE 5 means it takes only 5 years to break even. On the optimistic side, earnings could grow. On the pessimistic side, the reverse. PE 5 provides space for earnings to fall. While maintaining 10% or more in yield.

The problem I see is, such earnings might not be in the retail investors' pockets for many years. All the earnings are either retained (NAV), reinvest or given out (Div); and it's still value created for investors. But some good companies made good money and decided to reinvest and diworsification (I have more cynical imagination on this) and failed.

On PB side, it could remain depressed for as long as it wants (price not moving up). Family business, doesn't want to go private. No ambitious plan to grow, and yet very little dividend. And if the MOS is based of "if it close down, I make X% instantly", such companies simply won't die.
Singapore retail investor should really band together instead of seeing 8-10 people in AGM, and press for dividend if the monies are not put to better use.

(Just vested this month )

(20-03-2015, 02:06 PM)Raks Wrote: My green opinion on PE or PB as valuation.
PE 5 = 20% yield (+ dividend yield) is based on the assumption that such earning is reproducible. In fact, PE 5 means it takes only 5 years to break even. On the optimistic side, earnings could grow. On the pessimistic side, the reverse. PE 5 provides space for earnings to fall. While maintaining 10% or more in yield.

The problem I see is, such earnings might not be in the retail investors' pockets for many years. All the earnings are either retained (NAV), reinvest or given out (Div); and it's still value created for investors. But some good companies made good money and decided to reinvest and diworsification (I have more cynical imagination on this) and failed.

On PB side, it could remain depressed for as long as it wants (price not moving up). Family business, doesn't want to go private. No ambitious plan to grow, and yet very little dividend. And if the MOS is based of "if it close down, I make X% instantly", such companies simply won't die.
Singapore retail investor should really band together instead of seeing 8-10 people in AGM, and press for dividend if the monies are not put to better use.

(Just vested this month )

PE or PB for valuation, depend on the stock. Valuing a service-base company e.g. telecom by asset, is improper, IMO. Sometimes, both will give a more comprehensive view on the valuation.

For valuation, asset, is realizable asset, while earning is recurring earning. Both require judgement calls. I valued Penguin with both (recurring) earning and (realizable) NAV.

Penguin's asset mainly on PPE, Cash and Inventories. PPE are normally undervalued, due to its faster depreciation rate of vessels and two yards. Cash is cash. Inventories are mostly Work-In-Progress, which I assume is order-based, and valued as COS. All are telling that we should value Penguin with a premium over net asset.

(vested, sharing my general principle of valuation)

(20-03-2015, 01:47 PM)Raks Wrote: On the other hand, those that have already paid off the debts, $40 dollars a barrel is still making money and there's no reason to cut.

Raks san

Are you saying that there are companies that are making a profit on $40 oil? If so, I would be most grateful if you could list some of these companies.

One of my investing rule is never buy a pure cyclical company above its book value. Rig building, shipbuilding, property, shipping etc..

(20-03-2015, 10:28 PM)Bibi Wrote: One of my investing rule is never buy a pure cyclical company above its book value. Rig building, shipbuilding, property, shipping etc..

That's also one of my investing principles. I will only invest in the stocks of a company in a cyclical industry when it's priced below book value, during the industry down turn. In an upturn, they are only good for short term trade.