Penguin International

[CityFarmer]

Penguin's 2Q results showed a total receivable of approx 12M against its 2Q revenue of 22.2 Mil (1H rev: 58.08 Mil). Its receivable at end of Fy 14 was 23.5 mil.
Its trade payable is 45M against 50Mil at end of FY 14.

Overall it shows quite a good cash mgmt by the company in the receivables and payable area.

I agree what is worrying is the disposal of existing vessels. As mentioned in my earlier post, it is likely Penguin has added more ships to its pelican subsidiary and from the website, it seems they have successfully sold/charter 1 of their vessel in the past 1 month; leaving 13 vessels for charter or sale.

What has been worrying me as well is the high level of inventory kept on balance sheet. As mentioned by dydx, the building time of Penguin's vessel is approx 6 months and I understand Penguin has lengthened the building time. Penguin has been holding a high level of inventory (56.77Mil as of 31/12/2014) since end Dec 14. Hence by this 3Q results, inventories should start to significantly fall from current level of 69Mil. Hopefully it does not mean a further rise in PPE

I agree so far, the receivable and payable remain healthy. The receivable cycle is lower in FY2014, comparing with FY2013, means the management has managed to tighten the customer credit, rather than lengthen it, which is good. The payable cycle is longer, in the same period, means suppliers are confident to give longer credit line to Penguin, which is also good. I reckon, the first sign of deterioration in biz confidence, both from customers and suppliers, will be shown in the receivable and payable cycle, thus the important, IMO

 What if order has piled up in 3rd-Q, which will be reflected in a surge in inventories?