Penguin International

[CY09]

For me the worries are still the same: the high level of inventories which has been persistent for 4 quarters and the expanding Pelican fleet. Truth be told, I think some cost cutting measures have to be implemented such as rationalizing headcount etc. This is due to the increasing admin cost.

In addition, not adding to Pelician fleet is definitely good. Hopefully, R&D into new vessels can be slowed down so that the remaining inventory stocks of Flex boats will not be made redundant by newer crewboat models

[Yoyo]

It is indeed a bit depressing for those who attended the AGM, as one shareholder pointed out, in the previous year, when business is good, he saw only one boat at the site, whereas this year he saw the opposite, many on shore and in the water. (unsold crewboats and unchartered Pelician vessels)  Implication - This means that Qtr1 2016 Inventory balance will be high. 

We feel the pain: the pain of having a few unsold FLEX crewboats.  We are pricing them attractively as we engage in discussions with several parties. (namely African, for some of the unsold FLEX, not all) While we are still receiving enquiries, the challenge these days is that owners are in less of a hurry to commit, and those who have committed are taking longer to pay up. We are motivated sellers but not desperate. (lowered pricing yes, fire sale no) Given our economies of scale, there is considerable flexibility in pricing our balance Flexes for sale. More importantly, there is still demand for our Flexes as security vessels (albeit less lucrative). (little risk of vessel redundancy and obsolescene – floor pricing for unsold vessel)

Cost cutting:
• Freezing capex and headcount. – In effect
• Reducing our shipbuilding workforce in Singapore and Batam – Carried out and monitoring further needs
• Pay cut – Not there yet.
 
Just to clarify, no more interco order for Pelician fleet at the point of AGM.  Below pertained to previous order placement made before AGM:
In 2016, Pelican will further sharpen its competitive edge when it takes delivery of two brand new Flex designs – the Flex-25 CAT and the Flex-42X. (Live up to the role of showcase / guinea pig for new products with improved features)
 
IMHO, cutting back on R&D in bad times may not be beneficial to the business in the long term.
 
Near future catalyst
Marketing to government departments, local and overseas: We have leveraged our track record to participate in several government tenders for patrol boats, ferries and search-and-rescue vessels. We hope to make a breakthrough this year.

Any good news help.

Heavily vested
Quote:  If you like something, take a big bite.
Perhaps I have bite a little too much too early.  Still learning the art of investing.

[BlueKelah]

Yoyo its ok, you are not alone, IIRC CY09 had a big % of his portfolio >60% vested in Penguin too, and some in Sumedera Shipping. Next time just allocate more evenly loh.

For fans of maritine sector it will basically be hold and maybe accumulate during this downturn. If what GG said is right and history repeats it will be around 7 lean years before seeing a boom in this sector again. Already 1 lean year over, only another 6 more years before a violent rebound boom comes for shipping.

[brattzz]

wat!!! hold on for another 6 yrs?!!! waos! ..... cannot lah...
:O :O :O

why not cut-loss and reinvest the cash?!

[CY09]

Kind of agree with bratzz comments, try to deploy cash for other purpose.

As for me, I did realise some losses by selling out of penguin at its 0.16 and recently 0.13 level. It is still a significant portion of portfoilo. Samuedra shipping I have sold off at 0.21. Recently invested in xmh at 0.4.

My worry is that the o&g sectors are not doing capex and this is affecting order books in many company. And it was my mistake of valuing ops cash flow and earnings at a cycle peak.

[specuvestor]

It is during times of stress that your thesis and understanding of a stock is tested, and where alpha stocks emerges.

But that doesn't mean we forget about execution. Mr Market never demanded us to to pay for a ticket to learn, nor hold a binary unchanging call through a cycle

[mslee888]

Its more likely to be a case of its going to be worse before it gets better.
Q4/2015 numbers already very bad, I doubt we can see improvement in Q1/2016 or even Q2/2016 numbers. It will be a bonus if they can pare those inventories down.
I asked Jeff if company can avoid RED ink in 1st haf 2016 before I went off during the AGM. He can only say they will try very hard to do so..not too optimistic, I feel....

I think one can pare down his holdings if they are losing sleep or getting uncomfortable with their share holding size in this company. Its going to be a long tough ride.

IMO, for those brave hearts...to add their holdings for whatever reasons, its best to do so after share consolidation. We do not know if Mr Market will react kindly to the consolidation exercise.

Vested...

[CityFarmer]

Re-balancing of portfolio to reduce risk, is necessary from time to time, due to fundamental changes. I am skeptical on a plan, to divest, hoard cash, and wait for "good timing" to get in for a rebound. 

It is not because the "plan" is impossible, but very difficult to execute consistently, at least for myself.

Penguin, is the only direct exposure to O&G in my portfolio, and a size-able holding. Due to the disciplined approach in allocation, the overall portfolio isn't too bad amid the current storm. I will keep Penguin as it is, since I don't think I can predict the near future trend reliably. Market has never failed to surprise me, in the past, and very likely in the future too. 

Penguin aluminum vessel is more versatile than OSV, thus might not depend solely on O&G sector. This is one of my reasons, to invest in Penguin, rather than any of the OSV stocks.

(vested, and will remain vested)

[Muck]

Not only in good times do you find more competition. When everyone is struggling... they may encroach into each others' business domain... Here's an example of added competition for Penguin even while it is trying to diversify its own business.

---------------------------
Marine firms diversify to stay afloat in downturn
http://www.iesingapore.gov.sg/Media-Cent...n-downturn

"... ...Another company, Dundee Marine and Industrial Services, has mostly focused on ship repairs since it started in 1977 but is now diversifying into aluminium boat building. With first-quarter revenue down by 50 per cent from the same period last year, general manager Spenser Tan estimates the firm would have retrenched 30 per cent of staff if not for its latest project, a more energy-efficient aluminium crew boat.

The crew boat, with a lighter and more streamlined hull form designed and built in-house, was launched in the market in April.

"Now, others are retrenching, but we are hiring," said Mr Tan. The company has added 30 new staff, including engineers and naval architects, to its force of around 100 since oil prices plunged in 2014..."

[CY09]

A quick look at Penguin's annual report shows that Penguin has about 32 Mil of finished goods at cost in its inventory out of 53.4 Mil. That is approximately 4 crewboats completed and looking to be sold. Including the 4 new Pelician additions (redeem, renewal, victory, pride), which are seeking to be charter/sold, Penguin as a group has about 8 crew boats spare.

It shows how tough the crew boat industry is in now and 'Dundee Marine and Industrial Service" is now joining in. Furthermore, they are merely starting out unlike Penguin which has 3-4 years of expertise. Dundee must be in a very desperate situation to join into an industry of over capacity or that its mgmt is foolishly optimistic on its prospects