Penguin International

The big boys bought this stock and push it up from 40++ to 70 cents. Then good results are announced. Guess it was a good time to offload. Now with the sudden bearish sentiment, the stock suffers a steep fall as big boys cut their stake to protect their capital....I think they are still in the money so they might continue to sell if they are able to...

My two cents worth....

Quality company or otherwise, the margin of safety and potential returns of an investment is always inversely related to the price paid.

Unfortunately, it is almost always only on hindsight that one can tell whether there was any margin of safety in the price paid.

If the low oil price persists, some of the less competitive oil producers -- who are buyers/lessee of Penguin's boats -- may decide to halt operations. The implications of that should not be difficult to imagine.

(09-03-2020, 05:34 PM)dydx Wrote: 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

If oil prices stay at USD 30 or goes even lower, i think contracts would dry up, companies have difficulties paying salaries of employees. There should be a new wave of bankruptcy in this sector. i think the last thing on the minds of management is to set aside capex for crewboats. This is my short term outlook. Long term, anything is possible.

Penguin did experience a period of low oil (period 2015-2016). During then, its shipbuilding of new boats was indeed in the doldrums and chartering business wasn't that great. This is mainly due to the fall in business activity in South east Asia and Africa where its crew boat serve. A low oil price will indeed mean a reduction in oil activity in these areas and in turn the need for Penguin's Products (penguin is a form of demand dependent on oil)

So I do think Penguin charter rates will be affected if this sub 40 oil price continues. That said Penguin has moved on with its aluminium crewboats now serving other functions like firefighting etc, but most of such takers seem to be the Singapore government and some small South East Asia companies. So in the short term, I do expect revenue to fall, but am curious will Singapore government step in to put orders with ST marine and Penguin for more aluminium boats. It will be a game changer if the Singapore government steps in again

Even a sharp drop in oil price to the current USD34 level should not just kill Penguin's businesses. This kind of thought doesn't make good sense, especially since Penguin has built up a rock-solid balance sheet including a large cash reserve. Instead of thinking about a doomsday scenario, perhaps we should just relax and watch Penguin's corporate/products videos..
https://www.youtube.com/watch?v=_Z3DPuF5E0Y [corporate video]
https://www.youtube.com/watch?v=Gm9diPVhf-Y [Flex-42X]
https://www.youtube.com/watch?v=EPYWdqIg35A&t=18s [Flex Fighter]

I do agree that the price action for Penguin seems highly correlated with Oil price. But in a world of distress, correlation goes to 1 for all risk assets. Any idea why DBS was down 8% in a day? Beats me.

What's to be determined though is the correlation of the company's business with oil price. And that we can only know in the next financial statement. I believe this company does not need Quarterly Reporting though?

For all those who have been following the thread, if you have bought in the 30 cents region, you are still having a huge buffer. You can err on the side of prudence and pare some exposure in case this oil scenario gets long and extended, and the chartering and shipbuilding business suffers.

For all those who seems to possess clairvoyance and have seen this oil crash coming, good on you! Hope you have made huge truckloads of money shorting oil!

(09-03-2020, 05:45 PM)Behappyalways Wrote: The big boys bought this stock and push it up from 40++ to 70 cents. Then good results are announced. Guess it was a good time to offload. Now with the sudden bearish sentiment, the stock suffers a steep fall as big boys cut their stake to protect their capital....I think they are still in the money so they might continue to sell if they are able to...

My two cents worth....

How do you come to that conclusion? Based on inference or guessing?
From the volume over the past months, it doesn't seem to have "big boys" involved.
Even when the price dropped recently, the volume was quite small.

It is possible for funds/trading houses to slowly accumulate stocks over a long period of time (some to the extent of one whole year). This is due to the possible narrative of an earning boost which will then get retailer's attention or simply a setup to start a bull run of a company who have no fundamental reasons for its sky high valuations (think Blumont, OEL, Y ventures and some unknown penny counters that suddenly become the top 20 vol for a few trading sessions sometimes up to a month)

It is also possible for small volume of a stock to be transacted so as to to keep share prices of a company low due to their low liquidity. I have seen this in company movement such as Penguin, Innotek and Broadway Industrial (at the 4-7 cents range) where only a few thousand or ten thousands shares are transacted. Such low value transactions seem baffling to us retailers due to the high commission we occur but this is possible for fund houses and traders due to the low commission; they able to pay commission with no minimum fee. Hence, the possibility for them to engineer price movements on illiquid counters is plausible.

in the market, there are well known talks (which are close to truths) of groups of traders working together to move share prices. This happens not only in Singapore but the rest of the world. This is how technical analysis comes about. Since VB is more towards fundamental, this post goes as far as here

A select group of buyers accumulate inventory. Hire someone (or themselves) to write marketing/publicity materials on the wonders of owning said inventory. And proceeds to sell them when marketing/publicity materials are released.

Sometimes the marketing/publicity materials will generate buying interest, sometimes it doesn't.

For the consumers reading such marketing/publicity materials, it is important to always be acutely aware that it is a sales pamphlet they are reading, and not merely an information sheet.

===

I've seen several stocks of highly suspect quality whose price keeps going up, usually on low volume, and in the process, sometimes making the stock a multibagger.

I don't believe that there isn't anyone trying to manipulate stock prices.

The good thing for an investor who somehow stumbles into such stocks during the early stages of buying, is the money that can be made. The not so good thing is that said investor may actually start believing in having a superior ability to pick multibaggers, which may result in future mishaps.

(11-03-2020, 08:25 AM)karlmarx Wrote: A select group of buyers accumulate inventory. Hire someone (or themselves) to write marketing/publicity materials on the wonders of owning said inventory. And proceeds to sell them when marketing/publicity materials are released.

Sometimes the marketing/publicity materials will generate buying interest, sometimes it doesn't.

For the consumers reading such marketing/publicity materials, it is important to always be acutely aware that it is a sales pamphlet they are reading, and not merely an information sheet.

===

I've seen several stocks of highly suspect quality whose price keeps going up, usually on low volume, and in the process, sometimes making the stock a multibagger.

I don't believe that there isn't anyone trying to manipulate stock prices.

The good thing for an investor who somehow stumbles into such stocks during the early stages of buying, is the money that can be made. The not so good thing is that said investor may actually start believing in having a superior ability to pick multibaggers, which may result in future mishaps.

Can you name some of the suspects you have discovered so that we can monitor them against their fundamentals and momentum?
It'd be a good mental exercise for us.