Penguin International

http://www.marketwatch.com/story/oil-sta...0-21034059

Oversupply of oil -> cut back capital expenditure -> lowers demand for penguin's ship? possible?

It is quite sad to note a performing stock fundamentally has been downtrend for quite some time.

Already way overvalued. already some people here have collected at sub 14cent levels last year with sufficient MOS and will be looking to cash out.

Already had a big >100% rise and neither NAV nor dividend yield has risen enough to catch up with the stock price. Based on NAV there is no MOS anymore. Earnings may have already peaked.

If O&G sector goes into sustained downturn, like iron ore/rubber/palm oil, companies would probably stop new investment and ordering new vessels altogether. Have the happy buddies factored in this possibility and the potential hit to earnings? not sure how its gonna get to the 45cents valuation then. That's why I personally dun like to use earnings at all in my valuations.

At >20cents this share is definitely a sell and not buy.

Unfortunately I will have to "Caveat emptor" this stock.

(02-10-2014, 12:27 AM)BlueKelah Wrote: Already way overvalued. already some people here have collected at sub 14cent levels last year with sufficient MOS and will be looking to cash out.

Already had a big >100% rise and neither NAV nor dividend yield has risen enough to catch up with the stock price. Based on NAV there is no MOS anymore. Earnings may have already peaked.

If O&G sector goes into sustained downturn, like iron ore/rubber/palm oil, companies would probably stop new investment and ordering new vessels altogether. Have the happy buddies factored in this possibility and the potential hit to earnings? not sure how its gonna get to the 45cents valuation then. That's why I personally dun like to use earnings at all in my valuations.

At >20cents this share is definitely a sell and not buy.

Unfortunately I will have to "Caveat emptor" this stock.

First of all, Penguin business isn't entirely depend on O&G, unlike OSV builders. Next, I am not so sure O&G is going into a sustaining downturn now.


(vested)

Seems too me that majority of the stock are in the red these few days, not just earning based stock like penguin.

Unlike mining and plantation companies, the Oil and Gas sector does not slash and burn its CAPEX at every twitch of the commodity price. Their development projects are just too long term for that. Add to this the fact that there is a general trend of an expanding proportion of CAPEX being devoted to offshore production, as onshore fields mature and decline.

However, there may be some slowing of the rate of increase in offshore development as the O & G majors adjust to a reduced commodity price, so some reduction in demand is possible. To me, the main issues are whether Penguin has an inherent cost/quality advantage over competitors, and whether the management can skillfully adjust to changes in market demand. So far, i have liked what i have seen. Engineering/sales based in Singapore and building mainly in Batam should be a good basis for achieving a cost/quality competitive product. The relatively low cost expansion of existing facilities to meet demand also looks sensible, and responsibly cautious. My major worry is that if there is a downturn, there could be a temptation to keep building to maintain shipyard profits, and then a sudden crunch if they end up with a lot of boats in stock that they can't lease out. Maintaining the balance between building and leasing will be critical to the long term performance of this company. Don't want a repeat of the earlier incarnation of Penguin (in which i was also vested), when they ended up with a lot of ferries doing nothing but depreciate at anchor.

If the company can maintain the profit level of the first half in the second half, the P/E at today's price of 23c is about 4.5, less than 4 if they maintain the profit level for the second quarter, so the market appears to be pricing for a big fall in profits in the second half. It will be interesting to see the third quarter results in early November.

(vested)

(02-10-2014, 10:36 AM)Dosser Wrote: Unlike mining and plantation companies, the Oil and Gas sector does not slash and burn its CAPEX at every twitch of the commodity price. Their development projects are just too long term for that. Add to this the fact that there is a general trend of an expanding proportion of CAPEX being devoted to offshore production, as onshore fields mature and decline.

However, there may be some slowing of the rate of increase in offshore development as the O & G majors adjust to a reduced commodity price, so some reduction in demand is possible. To me, the main issues are whether Penguin has an inherent cost/quality advantage over competitors, and whether the management can skillfully adjust to changes in market demand. So far, i have liked what i have seen. Engineering/sales based in Singapore and building mainly in Batam should be a good basis for achieving a cost/quality competitive product. The relatively low cost expansion of existing facilities to meet demand also looks sensible, and responsibly cautious. My major worry is that if there is a downturn, there could be a temptation to keep building to maintain shipyard profits, and then a sudden crunch if they end up with a lot of boats in stock that they can't lease out. Maintaining the balance between building and leasing will be critical to the long term performance of this company. Don't want a repeat of the earlier incarnation of Penguin (in which i was also vested), when they ended up with a lot of ferries doing nothing but depreciate at anchor.

If the company can maintain the profit level of the first half in the second half, the P/E at today's price of 23c is about 4.5, less than 4 if they maintain the profit level for the second quarter, so the market appears to be pricing for a big fall in profits in the second half. It will be interesting to see the third quarter results in early November.

(vested)

I do agree with you on few points.

The cost structure of the company seems very optimized, especially so with the last low-cost capacity expansion. This is one of the moats of the company. As long as growth sustained, the NPM growth will sustain, IMO

I also do agree we should stay alert on inter-segment business. Base on FY2014 reports, the recent growth is mainly supported by external, rather than by inter-segment sales.

(vested)

Good afternoon, buddies !

Today then I realized that the Party in Penguin have been going on for close to 2 years already, hosted by brother dydx .

Too bad, I have missed the boat and may be a little risky to board the ferry now. So just add this counter in my watchlist and keep watching !

Have fun !

To be fair, I absolutely think Penguin's price is a good entry point.

Penguin has been able to grow its profit margins without taking on much debt. Their ships are also well built (look @ their specs), and versatile for different purpose.

One example would be their Flex-Fighter: Armed Security & Escort, Fire Fighting, Offshore Personnel, Standby & Medivac.

https://www.youtube.com/watch?v=WihZgyQwBM8

IMO, 3 of the moats of the company are
- Well-planned boat-building capacity. The company is well-prepared for capacity expansion, if needed. Most importantly, it is a low-cost mean of capacity expansion.
- Comprehensive product line-up. That is a very important differentiation among competitors.
- Chartering segment. It provides option for customers, as well as an excellence supplementary to boat-building business.

Sharing few thoughts.

(vested)

(03-10-2014, 10:05 AM)idyllic_yawster Wrote: To be fair, I absolutely think Penguin's price is a good entry point.

Penguin has been able to grow its profit margins without taking on much debt. Their ships are also well built (look @ their specs), and versatile for different purpose.

One example would be their Flex-Fighter: Armed Security & Escort, Fire Fighting, Offshore Personnel, Standby & Medivac.

https://www.youtube.com/watch?v=WihZgyQwBM8

(03-10-2014, 10:16 AM)CityFarmer Wrote: IMO, 3 of the moats of the company are
- Well-planned boat-building capacity. The company is well-prepared for capacity expansion, if needed. Most importantly, it is a low-cost mean of capacity expansion.
- Comprehensive product line-up. That is a very important differentiation among competitors.
- Chartering segment. It provides option for customers, as well as an excellence supplementary to boat-building business.

Sharing few thoughts.

(vested)

(03-10-2014, 10:05 AM)idyllic_yawster Wrote: To be fair, I absolutely think Penguin's price is a good entry point.

Penguin has been able to grow its profit margins without taking on much debt. Their ships are also well built (look @ their specs), and versatile for different purpose.

One example would be their Flex-Fighter: Armed Security & Escort, Fire Fighting, Offshore Personnel, Standby & Medivac.

https://www.youtube.com/watch?v=WihZgyQwBM8

Yes yes I agree!

Their product line-up meets the need of the industry! We can see the team of Jeff Hing and James Tham working very well! Any dips would be an opportunity to accumulate more. If anyone would tell me Penguin is overvalued, I highly doubt so. Of course, assets are important but if the earnings justify a share price, why not?

Quote:With a build cycle of less than six months, from keel lay to end of commissioning, we are the world’s fastest builder of crewboats. And with more than 20 crewboat deliveries a year, we are also the world’s most prolific builder of crewboats.