Penguin International

(08-03-2020, 05:19 PM)BlueKelah Wrote: Arab started oil war, oil price 30 coming. Penguin good game expect big drop Monday.

Hi BlueKelah,
As much as VB don't condone stuff like "huat ah" or its similar kin like "hip hip hurray" promotional posts, we also do not condone your kind "end of the world" 1 liner posts. Do take note.

Moderator

(08-03-2020, 10:09 PM)weijian Wrote:

(08-03-2020, 05:19 PM)BlueKelah Wrote: Arab started oil war, oil price 30 coming. Penguin good game expect big drop Monday.

Hi BlueKelah,
As much as VB don't condone stuff like "huat ah" or its similar kin like "hip hip hurray" promotional posts, we also do not condone your kind "end of the world" 1 liner posts. Do take note.

Moderator

Noted, i was on my phone so didnt have time to add. 

Oil price (WTI) overnight has fallen almost 10% since Russia and Saudis have failed to strike a deal to prop up the oil price. They have plans to increase production instead and it seems its going to be a "free for all" situation for OPEC now.

In a short span of a month, the price has fallen from $50 plus levels to now low $40s. Coupled with drop in demand from coronavirus, now very likely to be worse as the world goes into a pandemic phase, I expect oil price to hit $30 again or lower in the coming weeks.

Given I have often asserted that penguins share price tracks oil price, I would be very surprised if this stock doesnt drop >5% on Monday, barring any sudden changes to the OPEC situation.

In the coming months if oil price continues to be low, I fully expect Penguins share price to retrace back to 25-30c lows range where it was at beginning of 2019.

Being such a small cap, it is foolish to think that any "diversification" of their business woud insulate Penguins share price from fluctuating oil prices.

I will comment again when Penguin trades at 30c again and hold my silence on this stock till then

Even before the trade war and covid situations are over, this new oil 'price war' may well be the proverbial straw that breaks the weak global economy, and the so-called 'longest ever rally.'

If this price war persist, the hit will not only taken by the oil and gas industries, but also cause collateral damage to all other parts of the economy.

Owners of public listed equities most likely will experience a big drop in their portfolio for at least the time being. Investors who are not prepared to own Penguin -- or any other stocks -- for a very long time, should at least be concerned.

https://www.businesstimes.com.sg/energy-...-price-war

It may be devastation to the oil and gas industries in the short/mid term, and bad for the related-industries the short term, but actually good for the general economy in the mid term, through lowering the costs of input?

Indeed, input costs will be lower, and the economy will become more efficient, if energy prices stay low over the long-term.

If price drop is due to supply issue it is actually positive economy

If price drop is due to demand issue it is a sign of the economic demand

Thing is Russia refuses to reduce production because demand is weakening due to COVID and they have a budget hole to cover. Bad move cause this should be short term but now it is exacerbated. MBS has shown that he is quite hardline.

This saudi arabia is interesting. It goes something like, since you dont want to cooperate, i will push the oil prices down and we all suffer together. Shareholders of Penguin can take comfort from the fact that Berkshire bought some 10b occidental preference shares some time back. Perhaps, berkshire may lose money on this investment as well if oil prices stay low!

Warren Buffett have 128bil cash sitting there lol! No one dare to approach big brother US to cut oil output, and Donald trump gotten what it asked for! Or maybe he will call MBS to tell him price too low...

(09-03-2020, 10:05 AM)money Wrote: This saudi arabia is interesting. It goes something like, since you dont want to cooperate, i will push the oil prices down and we all suffer together. Shareholders of Penguin can take comfort from the fact that Berkshire bought some 10b occidental preference shares some time back. Perhaps, berkshire may lose money on this investment as well if oil prices stay low!

(09-03-2020, 10:05 AM)money Wrote: This saudi arabia is interesting. It goes something like, since you dont want to cooperate, i will push the oil prices down and we all suffer together. Shareholders of Penguin can take comfort from the fact that Berkshire bought some 10b occidental preference shares some time back. Perhaps, berkshire may lose money on this investment as well if oil prices stay low!

It is probably psychologically comforting to either take refuge in other people's losses, or knowing that you belong in a crowd.
But it is probably not how an OPMI needs to be setup cognitively, in order to survive in the equity markets.

When Mr Market has lost his balance and others are throwing away their wealth and run for the door, we can always take comfort on the strengths of the business and the management running it, and their comments. The following 2 para's in blue are extracts taken from Section 8 of Penguin's latest FY19 full-year results announcement..

"Penguin’s core shipbuilding and crewboat chartering activities are continuing to pick up amidst rising demand in new and existing markets."

"On the crewboat chartering front, time charter rates and utilisation rates have risen in line with increased demand from oil companies switching away from helicopters. Generally, benign oil prices bode well for crewboats over choppers."

So going forward Penguin's businesses may not suffer much after all because of (1) products and customers/markets diversification, and (2) oil companies' current preference for crewboats over choppers. 

I suppose it pays to review the latest results announcement again carefully..
https://links.sgx.com/FileOpen/Penguin_F...eID=597626