Penguin International

[Bubbachuck]

Penguin's largest customer is Miclyn Express Offshore (MEO).....
http://www.meogroup.com

MEO's latest presentation materials.....
http://www.meogroup.com/wp-content/uploa...2015_v.pdf
http://www.meogroup.com/wp-content/uploa...FY2015.pdf
http://www.meogroup.com/wp-content/uploa...ersion.pdf

Hi dxdx. Where did you get this info that Miclyn is their largest customer?

[Yoyo]

Penguin has no debt, but there is a "Other Payables and Accruals" of $36M which is about equivalent to the total cash. Anyone knows what is this accrual? Thanks.

Base on the AR, the "Other Payables and Accruals" is mainly accrued expenses, advance payment and deposit. The accrued expenses are likely material costs for boat-building. The advance payment and deposit may be for boat orders.

By right, a longer payable will reduce the working cap needed, which may not be a bad things, IMO

(vested)

Hi CityFarmer

I have seeked clarification with the Group FC, Mr Law on the nature of the accrued operating expenses. You are correct that they are mainly boat material/equipment cost, those that are yet to be invoiced by their suppliers.

PS: Invoiced by suppliers but unpaid recorded under Trade Payables: Not yet invoiced are accrued for under Other payables.

Another issue of interest to me, as pointed out by valuebuddies, is why James and Jeffrey did not increase their stake if they are probably certain that Penguin can do better in 2015? I dare not ask as this issue is quite personal and may be deemed confrontational. My apology.

[valuebuddies]

Thank you Yoyo, I don't expect that to be answered as well =)

[thor666]

Hi all,

I have posted my notes here: Link

My impression is similar to Stephentoh's. Management had declined to answer some questions (directly), but James had given clear hints: Read the AR and read between the lines. Unlike employees, shareholders have no obligation to sign NDA nor choose not to disclose information which could be useful to competitors. Even with the current information at hand, a hardworking investor could probably link enough to calculate the Gross Profit of the crewboats. Of course, you could say that management could have handled the question better. I beg to differ - I had been to a "blue chip REIT" AGM and felt the management was a lot more high-handed and bored of the obvious questions that shareholders were asking.

I noted that Penguin is a company where the Board also plays an active role in day-to-day running of the business, unlike larger firms which the Board is very much doing strategic moves and commanding middle management. James was very willing to interact with shareholders and explain the business, I believe quite a few shareholders caught on his passion for the shipbuilding industry.

Being a realist, I do note that competitors may eventually reverse-engineer Penguin's current success. Until then, I remain vested for the long term. Good management is hard to come by.

[valuebuddies]

I wonder if the disclosure of major contract wins invite more competitions? What about just the order books?

[CityFarmer]

Penguin has no debt, but there is a "Other Payables and Accruals" of $36M which is about equivalent to the total cash. Anyone knows what is this accrual? Thanks.

Base on the AR, the "Other Payables and Accruals" is mainly accrued expenses, advance payment and deposit. The accrued expenses are likely material costs for boat-building. The advance payment and deposit may be for boat orders.

By right, a longer payable will reduce the working cap needed, which may not be a bad things, IMO

(vested)

Hi CityFarmer

I have seeked clarification with the Group FC, Mr Law on the nature of the accrued operating expenses. You are correct that they are mainly boat material/equipment cost, those that are yet to be invoiced by their suppliers.

PS: Invoiced by suppliers but unpaid recorded under Trade Payables: Not yet invoiced are accrued for under Other payables.

Another issue of interest to me, as pointed out by valuebuddies, is why James and Jeffrey did not increase their stake if they are probably certain that Penguin can do better in 2015? I dare not ask as this issue is quite personal and may be deemed confrontational. My apology.

Thank for the update. It is useful to confirm it with CFO

My view on the doubt. It is in my Penguin story of a previous post. I capture it here for ease of reference.
http://www.valuebuddies.com/thread-3645-...#pid111414

"There is another concern on absent of insider trade, or share-buy-back, amid
a fast growth and undervalued share price. IMO, buying is positive, but not-to-buy
might be due to many reasons, rather on lack of optimism.

There is no insider trade, or share-buy-back since 2010, while the production
capacity has been increased with more capex in 2011, and further in 2014. With the
prudence of the management, it shows the confidence on the market outlook. In
fact, the sales was increased more than 50% annually in 2013, 2014, and very
likely in 2015. The market price has reflected the same, with +179% gain exclude
dividends in the last two (2) years. Will the same happen in near future? I reckon it
is very likely so."

[mslee888]

Just to add on or reinforce below points from AGM.

1. James has emphasized this a few times..Penguin is facing headwinds, so investors expectations must be tempered. I think we will see a weaker Q1 or Q2 results.

2. As to why James did not increase his holding...someone asked him during the site visit...he diplomatically answered he wanted to but his wife wanted to buy other companies shares...ha

Overall, Penguin shareholders are really serious investors. They asked some tough questions...management really spent quite a bit of time patiently answering qtns.

[dydx]

Notwithstanding headwinds from the fallen oil prices, we must not forget that Penguin has good and proven products which are competitively priced, and that exploring for and extracting from oil & gas reserves offshore is a long term trend and activity. The crew boat space within the global offshore oil & gas space sector, together with the mid-size aluminium boat space covering patrol boats, fast ferries and other crafts from Asia, Oceania to Africa, is a very big addressable market for Penguin to grow over the long term. And we must not forget that Penguin is a cost-competitive and efficient boat builder, and has been enhancing its products to meet customers' changing needs and expectations and offer them more value. Also, Penguin has a proven, competent and driven management team.

Based on the above, I guess it is reasonable to expect Penguin's business and profits to grow over the medium-to-longer term.

[valuebuddies]

Just to add on or reinforce below points from AGM.

1. James has emphasized this a few times..Penguin is facing headwinds, so investors expectations must be tempered. I think we will see a weaker Q1 or Q2 results.

2. As to why James did not increase his holding...someone asked him during the site visit...he diplomatically answered he wanted to but his wife wanted to buy other companies shares...ha

Overall, Penguin shareholders are really serious investors. They asked some tough questions...management really spent quite a bit of time patiently answering qtns.

I can see the link between point 1 and point 2

[Ben]

Just to share my own opinion. The LT prospect of Penguin is still very bright, but the road ahead is going to be bumpy. As the key men had said, Penguin is not immune to the down cycle, though we can bet that they will try their best to limit the downside to the minimum. Given Penguin strong financials, and the prudent and experienced management, I am confident that the company can withstand this storm and emerge stronger. But for those who expect Penguin performance to go only one way, which is UP, I hope you can lower your expectation a bit, at least for the short term.

It is quite an achievement that Penguin is now the world largest producer of aluminium crew boats, and the number second is a far distance away. With more new design coming out this year, plus they are actively looking into non O&G sector, I feel secure about its future. Once the O&G recover, and we are talking about when, not if, I am sure Penguin will continue its match to higher ground.

As for those who questioned why James and Jeffery is not buying more shares, to me, as long as they don’t sell, I am not concern at all.