Penguin International

[CY09]

Hi brattzz,

I am not concerned much on stock prices as long as business fundamentals do not deteriorate greatly since I have priced in a margin of error. Q1 result is something I look forward to as I am interested to see how derivatives profits are repriced in as gains; derivatives is something which I don't understand much. Other aspects that will raise my concern is if Penguin continues to spend the same level of CAPEX because they do not have further yard expansion projects and it can only mean they are increasing their fleet size- an indication that things may not be going well.

As to The question on sleeping well while investing, it depends again much on individual's psychology. Some people can tolerate more risk than others naturally, others have too much work/stress in their full time job until their portfolio holdings are put in the back of their mind. Currently, I am unfortunate to be in both categories. Hence my high stake in Penguin does not affect me. Maybe when I leave my job in a few months time, will my Penguin Size start eating into my sleep and temper.

That said my stake in Penguin is now 62% as extra cash were used to buy TTJ and Colex

[brattzz]

thanks CY09 for ur inputs,

certain features were raised which might be helpful for panic-attack investors,

1) Biz fundamentals
2) MOS
3) Investor's Psychology to Risks,

Sounds good to me!

I got 3x more TTJ than Penguin as i wanted to be part of singapore infrastructure biz more,
Will look more into Colex, , good or bad times, we still need waste management!

[valuebuddies]

If CY09 is concerned about fundamentals, then there is nothing to care about the derivatives. All these hedging gain/loss is much depending on the currencies fluctuation which is well beyond the company's controls, unless it practices speculation not hedging.

[LocalOptimal]

Interesting result.

Revenue and profit increased YoY but ultimately eroded by:

1) Forex losses
2) Increase in administrative expenses
3) Absence of vessel sales from existing fleet

Worth noting:
1) 13.3m CAPEX
2) 3m into inventories

The previous quarter has seen 22m outflow for inventories. Have that been translated into sales yet? If not, we may see a better Q2, coupled with the the 100th Flex to be delivered...

NAV is now 21 cents, after dividend it'll be 20 cents. Trading below book value now...

EDIT: Can't help but add on. On hindsight, I think the result is pretty aligned to what the buddies here have had in mind (Forex losses, business affected by oil prices, etc. In fact revenue/gross profit increased, signalling that demand in the crewboats have not subsided by alot).

[CY09]

Penguin is really trying to "flex" its luck here. in Q3FY14, Penguin's external revenue was 52M. However in Q4 and Q1, external revenue has fallen to 35M and inventories have been increasing as Penguin is able to build more crew boats/ "store more in progress crew boats" with their added yard capacity. In addition, for this quarter alone, Penguin has added approximately the same no of crew boats to its Chartering fleet as the number of vessels it had added in FY14. I believe the main aim is to ensure the yard runs at the same level of utilization rate since they have the additional manpower to sustain. It is an acceptable reason to bring forward the "expansion of our own fleet" plans to Q1 due to current circumstances. However to repeat it in every quarter from now is not prudent in my opinion. Furthermore, dampened market demand may not be able to support the chartering of Penguin's larger fleet as evident in the fall of chartering activities in Q1 FY15.

Penguin is stretching its cash flow and have started to take on borrowings. This is because they are stocking up on inventories and sooner or later, they will have to pay their accruals and payable, especially for its build to stock programme. It is worth noting they had utilized their receivables trick and is low on trade receivables due to them.

If the management is prudent, they should not carry on adding so much PPE in the next quarter and delaying the delivery of more vessels to longer periods, resulting in higher inventories. Continuing this trick is likely to cause cash to run low and having to take on debts.

For shareholders, It is preferable to hold now and wait to see how the mgmt reacts before accumulating. If the mgmt again adds another "year worth of PPE" in the next quarter, I will not be satisfied as it is too risky to my liking.

[LocalOptimal]

Penguin is really trying to "flex" its luck here. in Q3FY14, Penguin's external revenue was 52M. However in Q4 and Q1, external revenue has fallen to 35M and inventories have been increasing as Penguin is able to build more crew boats/ "store more in progress crew boats" with their added yard capacity. In addition, for this quarter alone, Penguin has added approximately the same no of crew boats to its Chartering fleet as the number of vessels it had added in FY14. I believe the main aim is to ensure the yard runs at the same level of utilization rate level since they have the additional manpower to sustain. It is an acceptable reason to bring forward the "expansion of our own fleet" plans to Q1 due to current circumstances. However to repeat it in every quarter from now is not prudent in my opinion. Furthermore, dampened market demand may not be able to support the chartering of Penguin's larger fleet as evident in the fall of chartering activities in Q1 FY15.

Penguin is stretching its cash flow and have started to take on borrowings. This is because they are stocking up on inventories and sooner or later, they will have to pay their accruals and payable, especially for its build to stock programme. It is worth noting they had utilized their receivables trick and is low on trade receivables due to them.

If the management is prudent, they should not carry on adding so much PPE in the next quarter and delaying the delivery of more vessels to longer periods, resulting in higher inventories. Continuing this trick is likely to cause cash to run low and having to take on debts.

For shareholders, It is preferable to hold now and wait to see how the mgmt reacts before accumulating. If the mgmt again adds another "year worth of PPE" in the next quarter, I will not be satisfied as it is too risky to my liking.

This is a valid concern... thanks for pointing it out.

[memphisb]

Commentary: Sobering sentiments in the offshore oil and gas industry are expected to temper demand for the Group's
crewboats and Fast Supply Intervention Vessels in sales and charters. The Group has moderated the pace
and volume of its shipbuilding activities in response to the industry slowdown, while it seeks out new
"projects outside of the oil and gas industry".

Notwithstanding market sentiments, the Group will continue its ongoing programme of developing niche
vessel designs targeted at profitable market segments.

[xlandjy]

Commentary: Sobering sentiments in the offshore oil and gas industry are expected to temper demand for the Group's
crewboats and Fast Supply Intervention Vessels in sales and charters. The Group has moderated the pace
and volume of its shipbuilding activities in response to the industry slowdown, while it seeks out new
"projects outside of the oil and gas industry".

Notwithstanding market sentiments, the Group will continue its ongoing programme of developing niche
vessel designs targeted at profitable market segments.

I have completely lost my faith in the company ... They are still bleeding profusely in forex ... from the AGM, I could see that the Independent, Chairman and the CEO and teir CFO did not show that they have much knowledge in tackling forex issue ...

In late January they announced in their website ..

.i][b]On 15 January, Penguin Shipyard International delivered its first crewboat in 2015 to a Malaysian owner, EA Technique. Named "Nautica Tg Puteri XXX", the Flex-40SL is Penguin’s 83rd Flex. For now, global
demand for crewboats remains steady against a backdrop of cheaper oil. After all, crewboats are a basic necessity in the offshore industry. And the Flex is the logical choice of enlightened crewboat owners.[/b][/i]

They said 'DEMAND FOR CREWBOATS REMAINS STEADY" and now they produced such results .... really disappointed...

[thor666]

Xlandjy: some info for your review, as I recall from memory and from other sources.

1. Agm - penguin had mentioned the loss on the report is more of a technical than actual loss, due to;
2. Penguin practicing forward contracts, which management alluded this practice as more conservative and practiced by other similar companies.
3. The ID that stood up to talk about this point was mr ong kian min, former pap mp and his cv reference:
http://www.drewnapier.com/Lawyers/Ong-Kian-Min
You might disagree with him but given his work profile, I do feel he/management must have consciously made decision to manage forex in this manner.

All being said, if you lost faith, is better to sell.

Sent from my D5503 using Tapatalk

[greengiraffe]

The writing is on the wall from the big picture... noone can be spared from the magnitude of global O&G downturn...

The best that mgt can do is to steer the company through the storm. Penguin's business remains cyclical... not a defensive one.

Odd Lots Vested
GG