Penguin International

[BlueKelah]

Just based on the current amount of inventories and accounts payables, there is good reason to believe FY2015 will see around 4 cents of earnings. Even at 25 cents, a PE of 6, is way undemanding. Then of course, to the purists, there is no discount to NAV at current prices, but the NAV should catch up within a year.

What is to say then, that the O&G will not see a sudden upturn, just like the sudden downturn? When the Penguin starts to sprint then in terms of EPS due to an O&G upturn, with any upwards revision to the PE that investors are willing to accord to it, the Penguin may become uncatchable at current prices.

Looking at the inventory numbers and the amount spent on inventory in the 4Q tells me they have a large order to fulfil in the next 6 months. This is good considering oil price has been sliding and yet they still receive orders. That tells their customers are not affected by the sliding oil price.

A bit too early to tell as oil slide only started late nov period, the financials reflect the period oil was still high, these could be the residual orders likely from before o&g companies started cutting expenditures.

Could face cancallation and drought of orders next quarter. Management already hinted

Lack of order book transparency will only leave investors speculating.
-- via Xperia Z1 with tapatalk

[yewkim]

Just based on the current amount of inventories and accounts payables, there is good reason to believe FY2015 will see around 4 cents of earnings. Even at 25 cents, a PE of 6, is way undemanding. Then of course, to the purists, there is no discount to NAV at current prices, but the NAV should catch up within a year.

What is to say then, that the O&G will not see a sudden upturn, just like the sudden downturn? When the Penguin starts to sprint then in terms of EPS due to an O&G upturn, with any upwards revision to the PE that investors are willing to accord to it, the Penguin may become uncatchable at current prices.

Looking at the inventory numbers and the amount spent on inventory in the 4Q tells me they have a large order to fulfil in the next 6 months. This is good considering oil price has been sliding and yet they still receive orders. That tells their customers are not affected by the sliding oil price.

A bit too early to tell as oil slide only started late nov period, the financials reflect the period oil was still high, these could be the residual orders likely from before o&g companies started cutting expenditures.

Could face cancallation and drought of orders next quarter. Management already hinted

Lack of order book transparency will only leave investors speculating.
-- via Xperia Z1 with tapatalk

Kindly, go and check your chart. Oil start it descend in June 2014., and not late Nov.

http://www.investing.com/commodities/crude-oil

[CityFarmer]

Just based on the current amount of inventories and accounts payables, there is good reason to believe FY2015 will see around 4 cents of earnings. Even at 25 cents, a PE of 6, is way undemanding. Then of course, to the purists, there is no discount to NAV at current prices, but the NAV should catch up within a year.

What is to say then, that the O&G will not see a sudden upturn, just like the sudden downturn? When the Penguin starts to sprint then in terms of EPS due to an O&G upturn, with any upwards revision to the PE that investors are willing to accord to it, the Penguin may become uncatchable at current prices.

Looking at the inventory numbers and the amount spent on inventory in the 4Q tells me they have a large order to fulfil in the next 6 months. This is good considering oil price has been sliding and yet they still receive orders. That tells their customers are not affected by the sliding oil price.

A bit too early to tell as oil slide only started late nov period, the financials reflect the period oil was still high, these could be the residual orders likely from before o&g companies started cutting expenditures.

Could face cancallation and drought of orders next quarter. Management already hinted

Lack of order book transparency will only leave investors speculating.
-- via Xperia Z1 with tapatalk

Kindly, go and check your chart. Oil start it descend in June 2014., and not late Nov.

http://www.investing.com/commodities/crude-oil

BlueKelah is right, oil price only started to fall rapidly near end of 2014.

Yes. The real test has just begun. The company is ready for the test, and will survive with little dent for FY2015, IMO.

(vested, and might be wrong)

[BlueKelah]

Yewkim : No need to check the charts as oil price is always there on bloomberg. To be more specific, since GFC, oil price (WTI) has gone down in 2010 to about $75 and 2012 to about $85 level. It did go down from $100+ in July 2014 to $75+ in Nov but given that at $75+ it was only at 2010 low levels, don't consider that to be a slide. And dropping to $75+ levels definitely wouldn't affect O&G sector that much that in turn that would affect Penguin's orders.

The "oil slide" meant, and that could possibly affect Penguin future orders on the O&G side, was the one that occured in Nov, especially after OPEC meeting, where oil price fell to the $50 dollar levels today, in like just 2 months.

Thanks CF for understanding what I was trying to say. Pretty sure Penguin will do fine with it's stellar balance sheet and might even pickup some if the div payout % increases and yield numbers are right.

[CY09]

Even adjusting for the poor Q4 results, Penguin is now selling for 4.8x P/E. This to me is not very rational as the market is valuing Nam cheong, its comparable, at 5.8x P/E and 1.48x P/NAV currently. Even adjusting for market size and balance sheet health, I think a 20% discount is overdone. Of course, Mr. Market may have better knowledge than me.

Nevertheless I have obtained more as my orders were filled today.

So does Penguin follow oil prices? If so, isn't Penguin like an oil stock mirroring oil prices except that you have a chartering business which can pad or pull down its earnings?

[weii]

Dear CY09,

I understand that you currently have more than 50% of your holdings in Penguin. May I know whether your strategy is to temporarily park your money in Penguin while busy researching companies in other industries to diversify into them at the appropriate time?

Mr. Market may think that new competitors previously not active in crew boat industry may now enter this sector as its margins are still good to diversify away from just building AHTS vessels.

[dydx]

Yesterday (26Feb15) being the first market-day after the release of the FY14 full-year result, and a total 7.4m shares changed hands even the financial numbers are great and a $0.01/share wss declared. I thought the sellers
appear a bit mindless, and the buyers got a good deal.

[yawnyawn]

My take on Penguin's FY14 results

Revenue: $164.8M (+49.4%)
Gross profit: $56.1M (+44.8%)
Operating profit: $31.6M (+68.1%)
Net profit: $30.2M (+82.0%)
EPS: 4.56c

The $0.01 dividend was expected and i am pretty pleased that the management is looking after miniority shareholders like us. Going forward, due to the weakness in oil prices, i am not expecting such a stellar performance like 2014.

However, if Penguin can make $20M in 2015, it is still trading at 5.5x earnings excluding cash, still pretty undervalued according to my own estimates.

(vested, and added somemore yesterday)

[CY09]

Dear CY09,

I understand that you currently have more than 50% of your holdings in Penguin. May I know whether your strategy is to temporarily park your money in Penguin while busy researching companies in other industries to diversify into them at the appropriate time?

Mr. Market may think that new competitors previously not active in crew boat industry may now enter this sector as its margins are still good to diversify away from just building AHTS vessels.

Hi Weii,

My strategy is not to temporarily park, it is very likely this money will remain in Penguin unless the mgmt changes to one not benefiting OPMI, like in the case of Sing Holdings. Alternately, another reason is that penguin has a sudden change in business condition such that its crew boats moat is eroded till what is left is a single digit market share on the global front.

It is true that I will diversify to reduce it to below 50%. However, this will be done gradually while i get income. I foresee Penguin will remain above 50% of my holdings through the next 2 years. It is hard for me to diversify because I do not see many other stocks with such a large MOS (judging through my lens), the only closest one which allows me to diversify and not concentrate on the current 4 stock holdings - are TTJ and Hotung based on current information. The other 2 which I am interested in are Teckwah, BBR but lower price is required

As for the issue of competitors, as I mentioned we will see about it, if Penguin does lose market share to the single digits, I will indeed worry. However the issue of competitors is always prevalent to all companies in all industries. And margins too may be dependent on a company's market positioning in that industry; quality producer at high margins vs lower margin producer who tries to make it up with volumes.

[weii]

Thanks CY09 for sharing.

I do encourage you to continue searching and you are likely to discover more gems. My investing focus is on high dividend stocks, particularly those in niche, high growth industries such as medical and lab equipment, life sciences and healthcare so I actually use a higher PE ratio and can tolerate higher debt level.

Unfortunately, Penguin has yet to fit my investment criteria and remains on my watchlist. I see Triyards as a strong contender in crew boat industry with its acquisition of Strategic Marine. Triyards has already excelled in building the technically challenging lift boats and I see it to be able to build similar or higher quality crew boats compared with Penguin. Oil majors may prefer to work with Triyards as it offers a more comprehensive solution from lift boats to crew boats. I am also not comfortable with the fact that 40% of Penguin's revenue comes from Africa market. In terms of percentage of profit, Africa market may be even higher. Past and present Singapore companies with exposure in Africa are JEL and Olam. Revenue from Rest of South East Asia has dropped quite significantly by around $11 million in FY14.
Anyway my views may be biased and incomplete. Here wishing you all the best in your investment and may you excel in this area.