(07-11-2014, 07:48 PM)dydx Wrote: With a fast-enlarging revenue base growing at 56% YoY, and increasing profitability as measured by PBT growing at an even faster rate at 98.5% YoY and by a PBT Margin reaching a high 20.5% in the first 9 months, quite clearly Penguin is the most prolific ship/boat builder listed on SGX….. http://infopub.sgx.com/FileOpen/Penguin_...eID=323397
I suppose with current FY's EPS running at $0.05, and backed by a positive outlook, Mr Market should be motivated to do his usual trick in revaluing the Penguin stock towards its justified fair value.
With an anticipated 5 cents per share EPS for current FY, should we expect a 1 cent dividend, instead of 0.5 cent per share previously, or more?
(happily vested together with fellow shareholders here)
While the results are excellent, not confident about a large end of year dividend. For the last 9 months, despite generating nearly $25m in profit, cash and cash equivalents have reduced by about $2m. Over $20m is represented by increases in inventories, receivables, deposits and prepayments. With a business that has grown its revenue by 56% YoY, there are bound to be large increases in these items. The increase in receivables, at 94%, needs watching. Cash has also been used for investment in new facilities, taxes and the previous dividend. While the company still has a generous cash buffer, being too generous with dividends at a time of rapid growth may not be the best policy - the money may be better retained in the company at this stage than returned to shareholders. I'd be happy with 0.5 cent, very happy with 1 cent, concerned if it was more than that.
(07-11-2014, 07:48 PM)dydx Wrote: With a fast-enlarging revenue base growing at 56% YoY, and increasing profitability as measured by PBT growing at an even faster rate at 98.5% YoY and by a PBT Margin reaching a high 20.5% in the first 9 months, quite clearly Penguin is the most prolific ship/boat builder listed on SGX….. http://infopub.sgx.com/FileOpen/Penguin_...eID=323397
I suppose with current FY's EPS running at $0.05, and backed by a positive outlook, Mr Market should be motivated to do his usual trick in revaluing the Penguin stock towards its justified fair value.
With an anticipated 5 cents per share EPS for current FY, should we expect a 1 cent dividend, instead of 0.5 cent per share previously, or more?
(happily vested together with fellow shareholders here)
While the results are excellent, not confident about a large end of year dividend. For the last 9 months, despite generating nearly $25m in profit, cash and cash equivalents have reduced by about $2m. Over $20m is represented by increases in inventories, receivables, deposits and prepayments. With a business that has grown its revenue by 56% YoY, there are bound to be large increases in these items. The increase in receivables, at 94%, needs watching. Cash has also been used for investment in new facilities, taxes and the previous dividend. While the company still has a generous cash buffer, being too generous with dividends at a time of rapid growth may not be the best policy - the money may be better retained in the company at this stage than returned to shareholders. I'd be happy with 0.5 cent, very happy with 1 cent, concerned if it was more than that.
Firstly, we know very well Penguin has a steady and conservative management and BOD. When the business was fast taking off in last FY13 (ended 31Dec13), and the management/BOD decided to spend on capex to significantly enlarge/upgrade its Batam yard and upgrade its Tuas (Singapore) yard, and also to launch new and improved boat models and increase its own fleet of "Flex" crew boats for chartering out - which has been bringing in a steadily growing stream of charter income and FCF - Penguin paid out a Final dividend of $0.005/share, from an EPS of $0.0245. Perhaps of equal importance, Penguin achieved the above by staying debt-free, relying on its own growing equity funds supplemented by customers' advance payments and normal suppliers' trade credit to fund the capex and the growing operation. Perhaps of even greater importance, Penguin has managed to grow its business base and at the same time raising efficiency and profitability, while maintaining maximum flexibility - by building and selling an increasing number of crewboats built-for-stock, increasing its own crewboat chartering activities by expanding its own fleet, selling crewboats from its existing fleet at good profits when opportunities arise, and raising its retained earnings backed by a growing cash reserve. All the above very positive development and evidences point to Penguin's business is enjoying a "sweet spot", and a very smart management at work.
The very significant improvement in the business based on the first 9 months' results of the current FY14 is a further confirmation of the above.
With no further major capex for the Batam yard anticipated, and assuming Penguin would continue to increase its fleet of crewboats at a measured rate (by say 2 or 3 crewboats a year on a net basis), I suppose Penguin's management and BOD should be soon thinking hard on how to reward shareholders - and themselves too, as they are and represent the major shareholders - from the expected high projected EPS of $0.05 for FY14. Since last FY13's Final dividend at $0.005/share was a conservative one, perhaps Penguin should consider paying out a one-third share of current FY14's earnings, or approx. $0.017/share, as a Final dividend. This is undemanding at all, as Penguin's B/S shows its net current asset and net cash balances have been growing nicely over time.
A quick calculation, based on TTM EPS, I'd expect the market to value it up to 33 cents (before the results the 52-high was 28 cents). Of course, 33 cents is still below mine, and most of the buddies' valuations.
If expansion works have been completed, I'd expect the slowdown in FCF to stop, giving way to a possibly higher final dividend.
Strike iron while hot. Since it is growing, might as well use the cash to grow the business even bigger and generate a higher share price for the shareholders. Giving higher dividend when company is growing will halve the effect on share price imo.
(08-11-2014, 09:41 AM)Life is a game Wrote: Strike iron while hot. Since it is growing, might as well use the cash to grow the business even bigger and generate a higher share price for the shareholders. Giving higher dividend when company is growing will halve the effect on share price imo.
I would be quite concern if Penguin uses its huge cash reserve to expand its business at this moment. Many companies made the mistakes of making hasty investment when they have too much cash on hand. Penguin has just completed its expansion program, and so I do not expect them to further expand it again in the short term. The management has thus far proven to be careful, perhaps even a bit conservative. This is good. I like to stay with company that is growing, and more importantly, grow at a sustainable rate. Expand too fast may lead to short term gain but long term pain. Penguin cash level has been high for a few years already. So yes, I hope they do increase the dividends for this year. In any case, even increasing the dividends to say 1c, which will amount to about $6.6 mil, they will still have ample left over to fund any expansion program, if any.
08-11-2014, 02:47 PM (This post was last modified: 08-11-2014, 02:48 PM by LocalOptimal.)
(08-11-2014, 02:11 PM)Ben Wrote:
(08-11-2014, 09:41 AM)Life is a game Wrote: Strike iron while hot. Since it is growing, might as well use the cash to grow the business even bigger and generate a higher share price for the shareholders. Giving higher dividend when company is growing will halve the effect on share price imo.
I would be quite concern if Penguin uses its huge cash reserve to expand its business at this moment. Many companies made the mistakes of making hasty investment when they have too much cash on hand. Penguin has just completed its expansion program, and so I do not expect them to further expand it again in the short term. The management has thus far proven to be careful, perhaps even a bit conservative. This is good. I like to stay with company that is growing, and more importantly, grow at a sustainable rate. Expand too fast may lead to short term gain but long term pain. Penguin cash level has been high for a few years already. So yes, I hope they do increase the dividends for this year. In any case, even increasing the dividends to say 1c, which will amount to about $6.6 mil, they will still have ample left over to fund any expansion program, if any.
I'm more aligned to ur opinion that growth should be at a sustainable rate. I hope we do not see a scenario where Penguin's fleet outgrows its demand.
Penguin management is quite conservative and opt for control growth.
not vested.
Extracted from AR2013.
STAYING AHEAD
Our relentless drive in research and development, as well as upgrades and enhancements, amidst a blistering pace of demand-driven production and fleet expansion, is our key to staying ahead of the competition and anchoring our core clients.
Above all, we will continue to manage our business conservatively. We may take on debt selectively, but we will not fund our build-for-stock programme with borrowings. We may appear aggressive in our building programme, but we will only build to meet demand. As we grow our fleet, we will also keep a close eye on dayrates and utilisation.
(08-11-2014, 02:47 PM)LocalOptimal Wrote:
(08-11-2014, 02:11 PM)Ben Wrote:
(08-11-2014, 09:41 AM)Life is a game Wrote: Strike iron while hot. Since it is growing, might as well use the cash to grow the business even bigger and generate a higher share price for the shareholders. Giving higher dividend when company is growing will halve the effect on share price imo.
I would be quite concern if Penguin uses its huge cash reserve to expand its business at this moment. Many companies made the mistakes of making hasty investment when they have too much cash on hand. Penguin has just completed its expansion program, and so I do not expect them to further expand it again in the short term. The management has thus far proven to be careful, perhaps even a bit conservative. This is good. I like to stay with company that is growing, and more importantly, grow at a sustainable rate. Expand too fast may lead to short term gain but long term pain. Penguin cash level has been high for a few years already. So yes, I hope they do increase the dividends for this year. In any case, even increasing the dividends to say 1c, which will amount to about $6.6 mil, they will still have ample left over to fund any expansion program, if any.
I'm more aligned to ur opinion that growth should be at a sustainable rate. I hope we do not see a scenario where Penguin's fleet outgrows its demand.
(07-11-2014, 07:48 PM)dydx Wrote: With a fast-enlarging revenue base growing at 56% YoY, and increasing profitability as measured by PBT growing at an even faster rate at 98.5% YoY and by a PBT Margin reaching a high 20.5% in the first 9 months, quite clearly Penguin is the most prolific ship/boat builder listed on SGX….. http://infopub.sgx.com/FileOpen/Penguin_...eID=323397
I suppose with current FY's EPS running at $0.05, and backed by a positive outlook, Mr Market should be motivated to do his usual trick in revaluing the Penguin stock towards its justified fair value.
With an anticipated 5 cents per share EPS for current FY, should we expect a 1 cent dividend, instead of 0.5 cent per share previously, or more?
(happily vested together with fellow shareholders here)
While the results are excellent, not confident about a large end of year dividend. For the last 9 months, despite generating nearly $25m in profit, cash and cash equivalents have reduced by about $2m. Over $20m is represented by increases in inventories, receivables, deposits and prepayments. With a business that has grown its revenue by 56% YoY, there are bound to be large increases in these items. The increase in receivables, at 94%, needs watching. Cash has also been used for investment in new facilities, taxes and the previous dividend. While the company still has a generous cash buffer, being too generous with dividends at a time of rapid growth may not be the best policy - the money may be better retained in the company at this stage than returned to shareholders. I'd be happy with 0.5 cent, very happy with 1 cent, concerned if it was more than that.
Firstly, we know very well Penguin has a steady and conservative management and BOD. When the business was fast taking off in last FY13 (ended 31Dec13), and the management/BOD decided to spend on capex to significantly enlarge/upgrade its Batam yard and upgrade its Tuas (Singapore) yard, and also to launch new and improved boat models and increase its own fleet of "Flex" crew boats for chartering out - which has been bringing in a steadily growing stream of charter income and FCF - Penguin paid out a Final dividend of $0.005/share, from an EPS of $0.0245. Perhaps of equal importance, Penguin achieved the above by staying debt-free, relying on its own growing equity funds supplemented by customers' advance payments and normal suppliers' trade credit to fund the capex and the growing operation. Perhaps of even greater importance, Penguin has managed to grow its business base and at the same time raising efficiency and profitability, while maintaining maximum flexibility - by building and selling an increasing number of crewboats built-for-stock, increasing its own crewboat chartering activities by expanding its own fleet, selling crewboats from its existing fleet at good profits when opportunities arise, and raising its retained earnings backed by a growing cash reserve. All the above very positive development and evidences point to Penguin's business is enjoying a "sweet spot", and a very smart management at work.
The very significant improvement in the business based on the first 9 months' results of the current FY14 is a further confirmation of the above.
With no further major capex for the Batam yard anticipated, and assuming Penguin would continue to increase its fleet of crewboats at a measured rate (by say 2 or 3 crewboats a year on a net basis), I suppose Penguin's management and BOD should be soon thinking hard on how to reward shareholders - and themselves too, as they are and represent the major shareholders - from the expected high projected EPS of $0.05 for FY14. Since last FY13's Final dividend at $0.005/share was a conservative one, perhaps Penguin should consider paying out a one-third share of current FY14's earnings, or approx. $0.017/share, as a Final dividend. This is undemanding at all, as Penguin's B/S shows its net current asset and net cash balances have been growing nicely over time.
You are probably right, but maybe for the following financial year? As you point out, management is conservative, and may not like to see their cash buffer dip too much.
A significant issue may be the receivables, which have increased by a large percentage over the last nine months (about $11.5m increase in terms of money), greater than percentage revenue increase. That may be a 'blip' - it could just be that there are some large customer payments that did not quite make the accounting month end. On the other hand it could reflect customers delaying their payments, possibly as a result of an industry response to drop in the price of crude. If it is an accounting blip, then there is no reason for management not to be generous with the dividend at the end of this financial year. However, if receivables stay high or increase due to the current industry environment, we may see a more cautious approach. All conjecture - we will find out for sure in 3.5 months.
08-11-2014, 05:05 PM (This post was last modified: 08-11-2014, 05:18 PM by CY09.)
Hi Dosser,
Hope the below Excel clears some of your query
As you can see the receivables growth is a bit erratic, while revenue growth is constant save for Q3Fy13. Overall, revenue growth outstrips receivables growth. Have not done for inventories, forgot to add it in.
Other info: Penguin's GPM is about 32.3%. Q1Fy14 result is a bit outlier as Penguin enjoyed tax credit instead of tax expense during Q1
IMO, there is no big cause of alarm yet because of increasing trade receivables. This is attributed to fast rev growth. Though it affects the cash flow, this is normal for a fast growing biz. I am fine if there is no increase in dividend payout, the cash will come in once the sales do not grow as rapid as the last few qtrs.
So far Penguin does not have bad debts provision so I guess it is fine to assume they have "good" customers.
With a good and conservative management and only a quarter to go, I am sure this is going to be a fantastic year for Penguin.
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