Penguin International

(08-04-2015, 08:53 PM)bear Wrote: Hi Yoyo

With regards to your question on the expanded capacity of Penguin,with reference to
http://www.penguin.com.sg/our-subsidiari...indonesia/
"With a dynamic workforce comprising over 1,000 personnel across all trades, PTKS is capable of delivering more than 30 Flex crewboats annually and undertaking a variety of repair and conversion activities concurrently."
Together with its Singapore shipyard expanded capacity is definitely more than 40.
Well,the concern is the strength of the demand for this and next year,for we know the supply is of no issue.

I have similar view, both the yard capacities can be expanded pretty easy with additional workshops or "slots". Supply isn't the issue, at least in near future. Demand should be the concern.

Can we believe Penguin's increasingly well-established crewboat business is in a "sweet spot" within the overall offshore oil & gas equipment space, where the demand from users/charterers/fleet owners for Penguin's own-design crewboats would remain strong for quite some time because of their industry leading features and operating characteristics, including superior economics.

We know Penguin has mentioned repeatedly in its website and interviews with trade publications that, I quote: "With a build cycle of less than six months from keel lay to delivery, we are the world’s fastest crewboat builder. And with more than 40 crewboats scheduled for delivery in 2015, we are also the world’s most prolific crewboat builder." If the above statement turns out to be totally untrue, I guess shareholders have every right to question the CEO and even take to task the entire BOD.

We should not forget that Penguin's 2 yards in Jurong and Batam do quite a bit of repair work for small vessels as well, and the repair side of the business can be ramped up should orders for new crewboats fall.

I believe Penguin is enjoying a sweet spot!

Let me share my view on the 2010 "huge loss" of contract termination, and the possibility of occurrence amid the low oil price. It is one of my initial doubts, during the DD.

You may notice that, after 2010/2011, the company had done a subtle shift to focus only on simple and standard crew-boat and FSIV. It should be part of the overall strategy.

During 2010 "iceberg", there was impossible to dispose the Safety Standby Rescue Vessels (SSRVs), even with huge discount, because it was a custom design vessel. Crew-boat and FSIV are different. They are standard boat design, probably with minimum requested customer fittings. Will termination of contract occur again? May be, but the impact is totally different. The crew-boat or FSIV can be easily re-sold with no discount to new customers. The short production cycle, allows quick adjustment to market demand.

Furthermore, Penguin's product provides essential service, which usually the last to cut for opex. Oil price must be low enough for a prolong period, to adversely affect Penguin business, IMO.

(vested, and might be biased)

(08-04-2015, 09:36 PM)dydx Wrote: Can we believe Penguin's increasingly well-established crewboat business is in a "sweet spot" within the overall offshore oil & gas equipment space, where the demand from users/charterers/fleet owners for Penguin's own-design crewboats would remain strong for quite some time because of their industry leading features and operating characteristics, including superior economics.

We know Penguin has mentioned repeatedly in its website and interviews with trade publications that, I quote: "With a build cycle of less than six months from keel lay to delivery, we are the world’s fastest crewboat builder. And with more than 40 crewboats scheduled for delivery in 2015, we are also the world’s most prolific crewboat builder." If the above statement turns out to be totally untrue, I guess shareholders have every right to question the CEO and even take to task the entire BOD.

We should not forget that Penguin's 2 yards in Jurong and Batam do quite a bit of repair work for small vessels as well, and the repair side of the business can be ramped up should orders for new crewboats fall.

I believe Penguin is enjoying a sweet spot!

I believe Penguin is enjoying a sweet spot too.

FYI, the repair and maintenance revenue is about 3-4 million annually, a very small business, compare with overall 165 million revenue.

(08-04-2015, 09:36 PM)dydx Wrote: Can we believe Penguin's increasingly well-established crewboat business is in a "sweet spot" within the overall offshore oil & gas equipment space, where the demand from users/charterers/fleet owners for Penguin's own-design crewboats would remain strong for quite some time because of their industry leading features and operating characteristics, including superior economics.

We know Penguin has mentioned repeatedly in its website and interviews with trade publications that, I quote: "With a build cycle of less than six months from keel lay to delivery, we are the world’s fastest crewboat builder. And with more than 40 crewboats scheduled for delivery in 2015, we are also the world’s most prolific crewboat builder." If the above statement turns out to be totally untrue, I guess shareholders have every right to question the CEO and even take to task the entire BOD.

We should not forget that Penguin's 2 yards in Jurong and Batam do quite a bit of repair work for small vessels as well, and the repair side of the business can be ramped up should orders for new crewboats fall.

I believe Penguin is enjoying a sweet spot!

Share price is not in such a sweet spot though.

Given the meteoric rise from below 10c aug 2013 to above 25c a year later, downside is much higher given the larger economic picture. would give more weight to the sector rather than the individual stock, like what they say about a rising tide and vice versa....

Prolific builder could be sitting on some pretty empty yards if there is a sudden drop in crewboat orders.



On another topic, found this and might be of interest to you ppl.

http://www.elitemarineboatbuilders.com/a...-indonesi/

Hi bear

Thanks for the supply confirmation.

Though we do not have much idea on the demand, these vessels are relatively small ticket items to the customers. You may cut back drastically on the big ticket items, but it does not make good sense to do the same on small ticket items which affect operational efficiency.

While Penguin does not provide information on its outstanding sales order, their indication of more than 40 flex deliveries in 2015 is comforting. Based on Jan 2015 announced delivery of the 83th Flex, I roughly estimated the 2014 flex delivery to be 22. Thus, in all likelihood (even with customer cancellation, if any), it will be a record flex delivery in 2015 in Penguin history.

We know that Penguin management is very conservative, and the fact that they have doubled the dividend payment, speak volume of their business confidence/outlook, though they have also explicitly highlighted the challenging conditions. (If I may use an example - try getting more money from a stingy person, and you will know how difficult it is. The fact that the stingy guy is willing to hand over more money, show that he is not too uncomfortable afterall. Perhaps my wishful interpretation)

Notice that Penguin has gained much momentum with Flex order since first launch in 2006. It took 6 years to reach 30th Flex (2011) and another 2 years to reach 60th Flex (2013). This growing vessel reputation and market recognition would likely entail a reasonable flow of higher orders, sustainable growth, IMO.

(vested)

With regards to qn 1, there is only 2 updates after penguin announces the termination of the contract.
1) One is dated on 11 Aug 10 whereby it states "ADNOC has since made a claim under bank refund guarantees for the refund of all progress payments plus interest. The refunds were fully funded by Penguin’s internal cash resources.
The Group is of the opinion that ADNOC had no right to terminate the contracts and the Group will vigorously pursue all legal options."
2)The other is dated on 28 Nov 11 whereby Penguin has filed a Writ of Summons and Amended Statement of Claim against Wartsila Ship Design Norway AS for loss and damage suffered by PSI in connection with the Contract Termination.

For 2), it seems like cancellation of contract might be due to problems related to weight and stability for the 2 SSRV.
Refer to below link
http://www.tradewindsnews.com/weekly/226...ks-dispute

EDIT: Google "Vessel design sparks dispute" if links doesn't work.

There isn't further updates after the announcement on 28 Nov 11..

(08-04-2015, 08:28 PM)Yoyo Wrote: Per AR 2010 Joint Message from your Chairman and your MD

“Iceberg Lessons” Then on 25 June 2010, an unexpected “iceberg” got in our way: Our shipyard received a notice of termination from Abu Dhabi National Oil Company (ADNOC) for the construction of two prototype 47- metre Safety Standby Rescue Vessels (SSRVs) designed by Norway’s VikSandvik (now part of Wartsila group). The shipbuilding contract was entered into in August 2007 and the vessels were completed in early 2010. As a shipbuilder, Penguin had faithfully constructed the two vessels according to class-approved and client-approved drawings provided by the client’s designer. We are currently evaluating our legal options and will update shareholders in due course. The contract with ADNOC required us to refund upon termination the payments received for the SSRV construction, resulting in a reversal of shipbuilding revenue of $32.3 million and a reversal of $5.3 million of profit in 2Q2010. Such refund guarantee arrangements are common with state-owned oil companies. As a prudent approach, we have also made a total non-cash provision of $26.7 million for the diminished value of the two SSRVs – for which we are currently evaluating recovery options.

IMHO - The customer is a state-owned oil company. Vessel is SSRVs (specially customer tailored - has low recovery value). Given the biz volume then in 2010, Penguin is in need of such big contract win to keep its shipyard occupied.

With more contract win and orders from repeated customers (more than 40 scheduled Flex deliveries in 2015), and the relative more ease of the Flex reselling to other customers or transfer to internal fleet for chartering (should there be any order termination), such kind of huge damage experienced in 2010 is unlikely to repeat.

Queries:
1. Do any VB has any idea whether Penguin is proceeding with legal action iro the above ADNOC terminated contract? If not, perhaps we can ask for an update in the AGM.
2. If Penguin is looking at 40 scheduled deliveries in 2015, compared to the 15 deliveries in 2013, does this meant that its expanded capacity is more than 40 annually.? PS: For the past few years, we have been told that Penguin can handle more than 20 vessels construction annually.

Hi Nuthing03

Thanks for your sharing the background/context of the ADNOC termination. So despite Penguin made known of its concerns well in advance, Penguin is left to "eat the dead cat" ie scapegoat. Indeed a painful lesson learnt.

Penguin is inside top 10% under GEMS, Governance Evaluation for Mid and Small Caps (GEMS), which is a methodology for evaluating the governance of listed SMEs

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Alamak, discovered by the market; days of buying cheap may soon be over!