Penguin International

[thor666]

I am losing money in this counter, to-date. A glance revealed that a lose of approx -30% in this counter.

Is it a mistake? I reckon it shouldn't be concluded as mistake yet, but a poor market timing. I have never taken market timing as a performance yardstick, anyway. 

I read the posts in this thread, none, if not few have doubted on the company quality, but entry prices. Penguin is the market leader of crewboat, and having good market share. Crewboat is necessary, as long as staffs/refills needed for O&G off-shore operations.

I am thinking, is there a possibility that, we might be discussing totally different scenario, few months later, if oil price catch us by surprise again on its up trend? 

A PE ratio comparison of nam cheong and penguin from 1 year ago will highlight that penguin has fallen significantly lesser than nam cheong. Investors need to set their investment horizons - 3, 5, 10 or even more years? I have always thought that penguin stands out as a net cash o&g company.. Surely they have done something different.

What penguin needs to do is to capture even more market share in this downturn. We are likely to see less boat orders and more maintenance requirements as companies stretch their budgets.


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[greengiraffe]

In case u guys forgotten or overlook this thread:

http://www.valuebuddies.com/thread-5729-...#pid118550

Quite insightful...

Maybe its not about the co but the industry as a whole

[Behappyalways]

Offshore Adrift On A Sea Of Cheaper Oil
https://clarksonsresearch.wordpress.com/...eaper-oil/

[CY09]

The problem for Penguin is its continued insistence to expand its fleet in bad times. It is likely for this FY, Penguin will accumulate about 30M of ship expansion into its under utilized chartering fleet. This is a 30% increase to its fleet. Furthermore, Penguin's fleet expansion has been financed in part via term loans.

As for its proposed yard addition, I do not have much issue because it will take 3 years to construct and the current Indonesia and Singapore yard will have 12 and 7 years left respectively. However, this yard expansion will cost money and from Penguin's weak cash position will be financed by debts probably 90%. Putting Penguin on a leverage position and surviving through the current oil crisis will be trying especially when it is a small company. With so much of its assets being in PPE, inventories and yard, banks may be worried of Penguin's liquidity and take away their "umbrella".Furthermore during this oil crisis, we can see many of Penguin's customers have deferred delivery leaving a record no of inventories in its books.

Hence, to continue expanding its fleet when no revenue is generated from it and then using debt to finance it is quite stupid. If the oil crisis does not blow over by then, Penguin may raise another round of equity and maybe the CEO's wife will give her blessing to over subscribe to increase his share holdings at the expense of cash strapped OPMI.

<vested>

[dydx]

I suppose it is understandable that when the stock market is down and when the macro-geopolitical environment is full of bad news, shareholders/investors alike would start thinking, imagining and speculating for the worst. The fact is that we are doing all these very much based on only Penguin's 2 recent quarters of seemingly weaker financial numbers.

I suppose we can also reasonably expect Penguin's management team to work very hard to make the necessary adjustments to its businesses in the face of the fallen oil price and tougher operating environment. The company should have slowed down its boat building programme by now, while working with customers to take delivery of those completed boats and those still in production, backed by previously signed orders which usually should include a certain amount of advance payments/deposits taken from customers. At the same time, those new boats built for its own charter fleet backed by charter contracts would have gone out to work and bringing in rentals over time. Given some luck and enough time, some of boats from its own charter fleet would be sold - and likely still at a profit, as Penguin has built them at its own low costs - resulting in a fall in the overall PPE balance, and the related cash received and profits would strengthen Penguin's still strong and liquid B/S further.

Penguin has a proven, competent and responsible management team under the guidance of a well represented BOD. I am looking forward to review the coming 3Q and full-year results.

[Tiggerbee]

I suppose it is understandable that when the stock market is down and when the macro-geopolitical environment is full of bad news, shareholders/investors alike would start thinking, imagining and speculating for the worst. The fact is that we are doing all these very much based on only Penguin's 2 recent quarters of seemingly weaker financial numbers.

I suppose we can also reasonably expect Penguin's management team to work very hard to make the necessary adjustments to its businesses in the face of the fallen oil price and tougher operating environment. The company should have slowed down its boat building programme by now, while working with customers to take delivery of those completed boats and those still in production, backed by previously signed orders which usually should include a certain amount of advance payments/deposits taken from customers. At the same time, those new boats built for its own charter fleet backed by charter contracts would have gone out to work and bringing in rentals over time. Given some luck and enough time, some of boats from its own charter fleet would be sold - and likely still at a profit, as Penguin has built them at its own low costs - resulting in a fall in the overall PPE balance, and the related cash received and profits would strengthen Penguin's still strong and liquid B/S further.

Penguin has a proven, competent and responsible management team under the guidance of a well represented BOD. I am looking forward to review the coming 3Q and full-year results.

That's what investors thought when SIA Engineering, Super Group and Osim experienced 1 or 2 quarters of weak earnings. If one choose to ignore or underestimate the headwinds that the companies are facing, he might be heading for a big surprise when things get uglier. And the investor ends up taking profit or cutting loss too late.

[greengiraffe]

I suppose it is understandable that when the stock market is down and when the macro-geopolitical environment is full of bad news, shareholders/investors alike would start thinking, imagining and speculating for the worst. The fact is that we are doing all these very much based on only Penguin's 2 recent quarters of seemingly weaker financial numbers.

I suppose we can also reasonably expect Penguin's management team to work very hard to make the necessary adjustments to its businesses in the face of the fallen oil price and tougher operating environment. The company should have slowed down its boat building programme by now, while working with customers to take delivery of those completed boats and those still in production, backed by previously signed orders which usually should include a certain amount of advance payments/deposits taken from customers. At the same time, those new boats built for its own charter fleet backed by charter contracts would have gone out to work and bringing in rentals over time. Given some luck and enough time, some of boats from its own charter fleet would be sold - and likely still at a profit, as Penguin has built them at its own low costs - resulting in a fall in the overall PPE balance, and the related cash received and profits would strengthen Penguin's still strong and liquid B/S further.

Penguin has a proven, competent and responsible management team under the guidance of a well represented BOD. I am looking forward to review the coming 3Q and full-year results.

That's what investors thought when SIA Engineering, Super Group and Osim experienced 1 or 2 quarters of weak earnings. If one choose to ignore or underestimate the headwinds that the companies are facing, he might be heading for a big surprise when things get uglier. And the investor ends up taking profit or cutting loss too late.

I suggest buddies take good look of Penguin over at least a decade... the company appears to have come to life during the late stages of the O&G cycle IIRC.

Decade Long Odd Lots Vested

[BlueKelah]

I suggest buddies take good look of Penguin over at least a decade... the company appears to have come to life during the late stages of the O&G cycle IIRC.

Decade Long Odd Lots Vested

astute observation, which basically means that the best time to start investing again in this stock would be likely the beginning of the late stages of the next O&G cycle?

[new-comer1]

Strong start today

[CityFarmer]

To share a view on the point of the company inventories, PPE, and the newly acquired land for expansion.

The company didn't report detail on inventories quarterly, but in annual reports. The company didn't keep completed vessel in the inventories, since 2011. The completed vessels were kept in PPE, and subjected to depreciation charges. I reckon it is a more prudent way instead of keeping them in inventories.

IMO, it is very likely the inventories are mainly WIP (work-in-progress), instead of completed vessel pending for customer deliveries. In other words, the "order" is still size-able based on the inventories value, IMO.

PPE is a valid concern, which has shown the slowness in the market. It should be the focus in the following quarterly reports.

The newly acquired land, will be funded by internal resources, as stated in the company announcement. The yard for aluminum vessel is vastly different from other shipbuilders on required capex. Based on latest AR 2014, existing yards incurred a "cost" of ~11 million for equipment, and ~20 million for land/building over the years. I reckon the new land acquisition and subsequent required capex, should be within the mean of the company internal resources. Of course, I agree that doing it prudently amid the storm is always desirable.

http://infopub.sgx.com/FileOpen/Expansio...eID=364212