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Anyone interested to go for the agm? Interested but it's so far...
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After doing a detailed review of the FY13 AR last evening, and just based on the latest FY13's EPS of $0.0249 - which in all likelihood is going to trend even higher in the next 2 FYs - and 31Dec13's NAV/share of $0.168, it does look like there is ample room for Mr Market to do his usual tricks to price the Penguin share higher over time towards its justified fair market value in line with its intrinsic value and the future growth potential and profits of this well organised business.
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What is the fair or intrinsic value of penguin? Now its trading close to P/B of 1.
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Thanks. Personally I do not think those are direct comparisons. Valuations are different for different markets, esp for US which is having high valuations. Two main reasons I like Penguin best is its prudent management and debt free status. Coupled with a dividend of 0.5ct is a bonus this round.
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We must not forget that Penguin has and owns its own crew boat designs and products - just like Keppel having and owning jack-up and semi-sub rig designs. As a boat builder as well as an owner of a growing charter fleet, Penguin is more capable to take full advantage of rising demand in an up-cycle - and hopefully also making more profits in the process - than a pure fleet owner-charterer. Also, as a builder with a debt-free B/S Penguin enjoys a much lower cost of investment for its charter fleet than a pure owner-charter with a geared-up B/S; this means that Penguin is able to compete better price-wise, especially in a down-cycle.
Another point to note is that a crew boat is much cheaper than a AHTS or PSV, so Penguin with a strong and debt-free B/S enjoys a lot more financial flexibility and lower financial risks when the company builds its own charter fleet to support big and small users in the region.
Lastly, a crew boat can carry both crew and cargos (mostly palletised) and run much faster than a PSV and cheaper than a helicopter. So bigger and more sophisticated crew boats that Penguin builds offer very compelling economics to the offshore operators. That's why in some countries like Malaysia even the authourities are encouraging the offshore operators to substitute helicopters with fast crew boats.
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Managed to have a quick read at the AR. Three things caught my attention:
1. Penguin managed to secure time charters for two of its laid-up ferries. One ferry has already gone on-hire and the other one is scheduled to commence her charter in 2Q’14. This leaves them with only one ferry idling. Take note that these three ferries were laid-up for the whole of FY2013, and the company had made an impairment provision of $1.25M in FY2013. With two out of the three ferries now starting to contribute, it will certainly improve their bottom lines in FY2014.
2. The new Flex 50 FSIV completed its sea trial successful in Dec 2013 and the first vessel will join its chartering fleet in early 2014. This will further boost its chartering business this year.
3. The top 20 largest shareholders now hold accumulatively more than 50% of total outstanding shares. It was about 47% in FY 2011 and FY 2012. The increase came despite a spike in share price in the past one year, an indication that more big and long term investors are taking an interest in this company. Should these 20 largest shareholders continue to hold or even add on to their position, the share price of penguin will likely continue to rise in coming years.
With the roll out of the new Flex 40 series crewboat, an increasingly enlarging fleet of chartering vessels with improving rates, laid-up ferries now put into good use, the upgrading of its yard to increase capacity, a solid BS with cash exceeding $40M and no debt, I look forward to another good year this year for penguin.
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