Penguin International

(27-08-2014, 10:53 AM)Harvest Time Wrote: Hence I am still holding on to Penguin as I feel that PE 5 is undervalue.

I thought if one feel its undervalue, one should buy more. Not hold on to it. If you dont feel like buying more, then that means the margin of safety is not enough for you to feel comfortable.

(27-08-2014, 09:26 PM)Bibi Wrote:

(27-08-2014, 10:53 AM)Harvest Time Wrote: Hence I am still holding on to Penguin as I feel that PE 5 is undervalue.

I thought if one feel its undervalue, one should buy more. Not hold on to it. If you dont feel like buying more, then that means the margin of safety is not enough for you to feel comfortable.

It may be that one does not want to keep too high of a % in 1 counter.

I'm vested and I feel this counter has more upside. But to minimize my risk, I'm not willing to increase my shares.

Yes, I agree. One can be confident abt a counter, but nt too confident. Nd to follow one's portfolio mgmt rules

(27-08-2014, 09:44 PM)LocalOptimal Wrote:

(27-08-2014, 09:26 PM)Bibi Wrote:

(27-08-2014, 10:53 AM)Harvest Time Wrote: Hence I am still holding on to Penguin as I feel that PE 5 is undervalue.

I thought if one feel its undervalue, one should buy more. Not hold on to it. If you dont feel like buying more, then that means the margin of safety is not enough for you to feel comfortable.

It may be that one does not want to keep too high of a % in 1 counter.

I'm vested and I feel this counter has more upside. But to minimize my risk, I'm not willing to increase my shares.

(27-08-2014, 09:26 PM)Bibi Wrote:

(27-08-2014, 10:53 AM)Harvest Time Wrote: Hence I am still holding on to Penguin as I feel that PE 5 is undervalue.

I thought if one feel its undervalue, one should buy more. Not hold on to it. If you dont feel like buying more, then that means the margin of safety is not enough for you to feel comfortable.

Agree. If it is undervalue, one should buy more.
However, one cannot buy too much for one counter. Some people is comfortable with 10%, some are comfortable with 30%.

I bought more last week.

Just to inform Vb members. There is a penguin sale today. Increased my exposure at 0.26

and so is Valuetronics! On sales too.

Political tension increasing in Ukraine affecting business on both sides as well as globally. Volatile small caps will usually feel the ups and down much more significantly and quicker, memang on sales lah.

I would like to supplement dydx's valuation from another prospective, a SOTP on the two business segments, the Boat-Building (includes Repair and Maintenance) segment, and Ferry and Charter (F&C) segment

The Boat-Building should be valued by PE. The segment is profitable with ROA/ROE of 24%/62% in FY2013. A PE of 7 with an estimated segment profit of 18 mil, gives a valuation of 126 mil

The F&C segment is a supplementary segment, but a cash cow, with bulk of expense as depreciation. It should be valued by net asset (NAV). The company has disposed the segment assets regularly, with profit, thus the booked value should be realistic. The segment booked asset was 111 mil, with segment booked liability of 21 mil, gives booked net asset (NAV) of 90 mil in FY2013

So SOTP are 216 mil, with share base of 660.5 mil, gives approx 33 cents per share. That serves as the base FV for me.

The valuation is lower than dydx's. Is this one still too far fetched?

(vested)

(08-08-2014, 12:29 PM)dydx Wrote: To determine the fair value of Penguin's entire business, I guess we have to look into its 4 components:

(1) the shipyard operations under Penguin Shipyard International - with 2 yards, 1 each in Singapore and Batam - which are presently enjoying strong demand for its crew boats of own design, therefore giving rise to a strong backlog and high/rising profitability based on an efficient manufacturing situation. The value of Penguin's growing product range - including into the bigger Flex-50 crew boats, the Flex Fighter and the Flex Ferry - should not be under-estimated. Backed by a strong order backlog, would this part of the business fetch at least $100.0m - IMHO, a very conservative estimate!! - in a trade sale?

(2) the crew boat charter fleet under Pelican Offshore Services - now with a fleet of at least 12 crew boats ranging from 36m to 50m available for charter in the regional market, this business is also enjoying increasing demand and likely also increasing charter rates. Assuming just an average CMV of $7.0m per crew boat, would Penguin's present fleet of crew boats fetch a minimum of $84.0m?

(3) the fleet of 10 passenger ferries now mostly deployed on a long-term contract with SAF to ferry soldiers in-and-fro SAF Ferry Terminal at Changi Point to Pulau Tekong - while this piece of business may not be very profitable, it should be a nice cash cow. Assuming just an average CMV of $1.0m per ferry, would Penguin's present fleet of passenger ferries fetch a minimum of $10.0m?

(4) Penguin's latest (as at 30Jun14) net cash reserve of approx. $45.0m.

A summation of the above 4 components would give a total of $239.0m, which will translate to a FV estimate of $0.362/share based on the latest 660.5m outstanding issue shares. Is this too far fetched?

Penguin's latest videos on the Flex-25, Flex-40SL, and Flex Fighter…..
http://www.penguin.com.sg/vessel-specs/flex-25/
http://www.penguin.com.sg/vessel-specs/flex-40sl/
http://www.penguin.com.sg/vessel-specs/flex-fighter/

The previous conservative valuation of 33 cents per share is base on FY2013. I just managed to get the valuation updated base on 1H2014 performance.

First of all, we got the superb performance in 1H2014, but we shouldn't just do a simple extrapolation of 2x. The company seems always done better in 1H, over 2H, so I took TTM data as reference.

The TTM revenue is 130 mil, with Boat-Building segment estimated revenue of 103 mil. The profit estimation of the segment is 22 mil. A PE of 7 gives a valuation of 154 mil

The F&C segment NAV has increased marginally in 1H2014, base on the company TTM depreciation and capex numbers. The NAV of 100 mil is estimated at the 1H2014.

So the updated SOTP valuation is 254 mil, with share base of 660.5 mil, gives approx 38 cents per share.

(vested)