Penguin International

[Reenat]

This is the third extension. Can they extend again?

Of course. From what I understand, the rule is D+4 months to get 90% in order to compulsory acquire the remaining dissenting shareholders. D is defined as the date which the offeror dispatches the offer document.

So, it is not the number of extensions that the rule is saying. But rather, the time period from the date where they started this offer going, which is defined as the date which they dispatches the offer document.

Hope that the above clarifies.

Hi Reenat,

I thought it is counted as D+4 months, where   D is defined as the date which the offeror dispatches the offer document.  The announcement was in May 4th and the dispatch was about 1 month later..

That is what I thought so, and I have also re-produced the relevant text from Section 215(1) of the Singapore Companies Act to support my view. You can refer to the link that I have provided in my previous post.

If you are interested, I can even give you the link to the relevant document from a law firm, which states that D+4 months is final date for acquiring 90% of the offer shares under Section 215(1) Companies Act to commence compulsory acquisition procedures.

I think I have been very clear in my explanation to you on this issue. However, dydx is entitled of course to his own opinion, and it is best for him to clarify that with you if he disagrees with me.

Not easy to decipher the rules  ...     We are all learning. 

Not sure if the 1 month lapse between the announcement and the offer letter was used to buy extra time to mop up shares in the open market.  Usually, offers are sent almost immediately after the announcement. (Note, the offers upped the ante within 1 week after the initial announcement though).

[ghchua]

Not sure if the 1 month lapse between the announcement and the offer letter was used to buy extra time to mop up shares in the open market.  Usually, offers are sent almost immediately after the announcement. (Note, the offers upped the ante within 1 week after the initial announcement though).

I don't think it is one month. It is less than that.

Under the rule, it is D-21 days. Which means, the announcement of an offer can be made 21 days before the dispatch of the offer documents.

Penguin made the offer announcement on 5 May 2023. The offer document is dated at 25 May 2023. I don't see anything wrong with that. It is within the D-21 days rule.

[dreamybear]

Net profit down but at the same time, revenue was up though.

How will the results affect the privatization acceptance rate ? Depends on whether prospects are favourable ?

Penguin International H1 net profit down 28.5% to S$6.1 million
https://www.businesstimes.com.sg/compani...61-million
"PENGUIN International : BTM -0.6% posted a 28.5 per cent drop in net profit to S$6.1 million for its first half ended Jun 30, 2023, from S$8.5 million in the previous corresponding period.....Revenue for the first half grew 44.9 per cent to S$89 million, from S$61.4 million a year earlier. The company attributed this mainly to an increase in the number of build-for-stock vessels sold and an increase in chartering activities over the period....."

-----------------

On a separate note, perhaps the following doc can help interested readers on privatization related matters :

https://www.mas.gov.sg/-/media/MAS/resou...y-2019.pdf

https://www.bakermckenzie.com/-/media/fi...e_2022.pdf  (under Singapore)
<there are also indicative timelines presented in line form>

[dydx]

1H results..
https://links.sgx.com/FileOpen/Penguin%2...eID=768290
Do note the financial statements the explanatory notes have not been audited or reviewed by the Company’s auditors, so it is as good as the management compiled the numbers and results announcement, and the BOD added its consent and then Penguin released it on SGX. With the latest position of the Offeror - a consortium comprising the Executive Chairman, MD and Dymon Asia Private Equity - at a critical 88.77%, common sense tells me that it will be naive to expect Penguin to post good profit numbers in the 1H results - which obviously will work against the Offeror's interest and objective to privatise Penguin for the cheap.

But frankly, I totally didn't expect the sharp 64.6% fall in group NP to only $2.4m, especially when group revenue advanced a strong 44.9% to $89.0m - with Shipbuilding/Ship Repair/Maintenance Div. +50.2% to $72.5m, and Vessel Chartering Div. +25.3% to $16.5m. Even my smart but inexperienced son - a SMU Scholar majored in Accounting - felt the extent of the profit decline unbelievable, especially since market demand and charter rates for offshore O&G equipment (rigs, vessels, etc.) have been on the rise post-Covid since 2022.

What I find totally unbelievable is that in segmental reporting (p12), Vessel Chartering Div. showed a pretax loss of ($1.48m) when revenue increased +25.3% to $16.3m, even though operating cash generation remained comfortably positive. In the explanatory notes (p23), it described that "higher marine insurance costs arising from more vessels being added to the Group’s operating fleet' contributed to the much higher operating expenses, which increased +104.1% to $7.8m. I find it hard to believe that marine insurance premiums related to more vessels added to the charter fleet could be more than the increase in charter income (revenue), resulting in turning the entire Chartering Div. from a pretax profit of +$1.43m in 1H-FY22, to a pretax loss of ($1.48m) in 1H-FY23. I really hope SGX Regco or SIAS could pick up the above abnormalities and query Penguin. If and when that happens, Penguin's Finance & Administration Director Tung May Fong would have to give proper factual explanations.

As usual, Penguin chose not to provide order backlog information on shipbuilding - which is generally available from most listed shipbuilders. From the very sharp increase and large balance under "Advance payments and deposits received (non-refundable)" of $34.32m (see p21,under Note. 15 Other payables and accruals; vs. only $4.82m as at 31Dec22), we actually have a concrete tell-tale sign that Penguin has secured a lot more new shipbuilding orders. Assuming 15% as a norm for advance payment/deposit for typically new shipbuilding contracts, we could be looking at over $200.0m in the order backlog for shipbuilding contracts backed by advance payments/deposits.

We know the Offeror wants our shares badly. In an indirect way, the just released 1H results again confirms that. I am keeping my prized Penguin shares for the next GO which should be at a much higher price more in line with the growing intrinsic value of this promising and well-placed business.

[dydx]

Though Penguin has not allowed shareholders/investors to visit their Batam yard (held under 100% subsidiary PT. Kim Seah Shipyard Indonesia), close scrutiny via aerial Google Maps indicates a lot of activities, with 8 vessels under construction at the open space alone, and approx. 1100 motor cycles parked both outside (mostly opposite the road) and inside the yard...
https://www.google.com/maps/place/PT.+Ki...?entry=ttu
Google doesn't lies! Mind you, there are another 9 vessels on water presumably new vessels waiting for delivery or vessels waiting for repair, and we are not counting vessels placed inside the 2 covered factory buildings yet, which by their large area sizes should be able to accommodate up to another 10 vessels.

Review this interesting CNA feature (including the video at the end) on Penguin's sustaining journey and future-proofing the business...
https://www.channelnewsasia.com/brandstu...EqbGKY7Mo0

Lastly, watch this video (by U.S. KVH Industries, Inc. (Nasdaq: KVHI) which is engaged in mobile connectivity products) on an interview with Penguin's MD James Tham - who has a 5% interest in the Offeror..
https://vimeo.com/589393572
Remaining minority shareholders should ask themselves whether they can continue to expect or rely on Tham to protect or look after their interests.

[weijian]

1H results..
https://links.sgx.com/FileOpen/Penguin%2...eID=768290
Do note the financial statements the explanatory notes have not been audited or reviewed by the Company’s auditors, so it is as good as the management compiled the numbers and results announcement, and the BOD added its consent and then Penguin released it on SGX. 

hi dydx,

Besides the annual reports, most financial results published by other companies are also unaudited by external auditors before they are published on SGX. When there are discrepancies between the unaudited and audited, the company will publish the update in due time.

So there is nothing particularly different between Penguin and all other listed companies on the SGX in terms of publishing unaudited statements. Your later statements may be construed negatively by whom they were directed at.

Moderator

[Mushy]

Though Penguin has not allowed shareholders/investors to visit their Batam yard (held under 100% subsidiary PT. Kim Seah Shipyard Indonesia), close scrutiny via aerial Google Maps indicates a lot of activities, with 8 vessels under construction at the open space alone, and approx. 1100 motor cycles parked both outside (mostly opposite the road) and inside the yard...
https://www.google.com/maps/place/PT.+Ki...?entry=ttu
Google doesn't lies! Mind you, there are another 9 vessels on water presumably new vessels waiting for delivery or vessels waiting for repair, and we are not counting vessels placed inside the 2 covered factory buildings yet, which by their large area sizes should be able to accommodate up to another 10 vessels.

Review this interesting CNA feature (including the video at the end) on Penguin's sustaining journey and future-proofing the business...
https://www.channelnewsasia.com/brandstu...EqbGKY7Mo0

Lastly, watch this video (by U.S. KVH Industries, Inc. (Nasdaq: KVHI) which is engaged in mobile connectivity products) on an interview with Penguin's MD James Tham - who has a 5% interest in the Offeror..
https://vimeo.com/589393572
Remaining minority shareholders should ask themselves whether they can continue to expect or rely on Tham to protect or look after their interests.

Hi dydx, how do you get live or recent google satelite image? If i click the link you provided, it states 2023 (bottom right). If I move the view to my home in sg, I can determine the imagery, also indicated as 2023 is more than 4 years ago due to the construction of a new park.

[dydx]

Hi Mushy,
I just made a search for PT Kim Seah Shipyard Indonesia on Google Maps and the map image came up, then I clicked for Satellite on the lower left corner, and the aerial image of the entire factory location came up. I just moved and enlarged the image, and I could count the number of vessels in the open area and made an estimate on the number of motorcycles neatly parked outside and opposite the factory. The left bottom of the map image shows Map data@2023 Google.

[donmihaihai]

1H results..
https://links.sgx.com/FileOpen/Penguin%2...eID=768290
Do note the financial statements the explanatory notes have not been audited or reviewed by the Company’s auditors, so it is as good as the management compiled the numbers and results announcement, and the BOD added its consent and then Penguin released it on SGX. With the latest position of the Offeror - a consortium comprising the Executive Chairman, MD and Dymon Asia Private Equity - at a critical 88.77%, common sense tells me that it will be naive to expect Penguin to post good profit numbers in the 1H results - which obviously will work against the Offeror's interest and objective to privatise Penguin for the cheap.

But frankly, I totally didn't expect the sharp 64.6% fall in group NP to only $2.4m, especially when group revenue advanced a strong 44.9% to $89.0m - with Shipbuilding/Ship Repair/Maintenance Div. +50.2% to $72.5m, and Vessel Chartering Div. +25.3% to $16.5m. Even my smart but inexperienced son - a SMU Scholar majored in Accounting - felt the extent of the profit decline unbelievable, especially since market demand and charter rates for offshore O&G equipment (rigs, vessels, etc.) have been on the rise post-Covid since 2022.

What I find totally unbelievable is that in segmental reporting (p12), Vessel Chartering Div. showed a pretax loss of ($1.48m) when revenue increased +25.3% to $16.3m, even though operating cash generation remained comfortably positive. In the explanatory notes (p23), it described that "higher marine insurance costs arising from more vessels being added to the Group’s operating fleet' contributed to the much higher operating expenses, which increased +104.1% to $7.8m. I find it hard to believe that marine insurance premiums related to more vessels added to the charter fleet could be more than the increase in charter income (revenue), resulting in turning the entire Chartering Div. from a pretax profit of +$1.43m in 1H-FY22, to a pretax loss of ($1.48m) in 1H-FY23. I really hope SGX Regco or SIAS could pick up the above abnormalities and query Penguin. If and when that happens, Penguin's Finance & Administration Director Tung May Fong would have to give proper factual explanations.

As usual, Penguin chose not to provide order backlog information on shipbuilding - which is generally available from most listed shipbuilders. From the very sharp increase and large balance under "Advance payments and deposits received (non-refundable)" of $34.32m (see p21,under Note. 15 Other payables and accruals; vs. only $4.82m as at 31Dec22), we actually have a concrete tell-tale sign that Penguin has secured a lot more new shipbuilding orders. Assuming 15% as a norm for advance payment/deposit for typically new shipbuilding contracts, we could be looking at over $200.0m in the order backlog for shipbuilding contracts backed by advance payments/deposits.

We know the Offeror wants our shares badly. In an indirect way, the just released 1H results again confirms that. I am keeping my prized Penguin shares for the next GO which should be at a much higher price more in line with the growing intrinsic value of this promising and well-placed business.

If I push it a little, the stupid me would have taken that the management committed fraud from your comment. 

Regardless of what the management position is, I still consider the financial result of Penguin fairly present at the minimum. Of course, that is me. 

1H FY2022 results wasn't that good. Margin is depressed since about 2 years ago and despite the higher NPAT in 1HFY2022, marketing, admin and other expense pretty much cleaned off GP. NPAT basically contributed by other income. Penguin performed better in 1H FY2023 in this aspect because of the increased in turnover. This is only part of the story, to understand Penguin number, one need to understand how Penguin operates because Penguin build to stock/operate and make opportunistic disposal, a good part of the profit will not come through turnover and COGS and it is also understandable that the management is able to control the timing of disposal but I would say that for this part, it is built in because any investor who invested in Penguin should know about this. 

My comment will piss people off, but words can kill, and I don't see that the management deserve to be painted to such a degree by words.

[Ben]

1H results..
https://links.sgx.com/FileOpen/Penguin%2...eID=768290
Do note the financial statements the explanatory notes have not been audited or reviewed by the Company’s auditors, so it is as good as the management compiled the numbers and results announcement, and the BOD added its consent and then Penguin released it on SGX. With the latest position of the Offeror - a consortium comprising the Executive Chairman, MD and Dymon Asia Private Equity - at a critical 88.77%, common sense tells me that it will be naive to expect Penguin to post good profit numbers in the 1H results - which obviously will work against the Offeror's interest and objective to privatise Penguin for the cheap.

We can also argue that they purposely report a set of bad results so that minority will throw in their shares to cash in their profit now.

For those who have been attending Penguin AGM in the past, the board and management, especially J&J are decent and straightforward people which is one of the major factors that distinguish this company from the others. I seriously doubt that they will go to the extend to massage the numbers to achieve their objectives.

I will take the results as accurate as it is presented.