Penguin International

[Ben]

This is indeed an excellent company with good management capabilities, sitting on a good spot to ride on the recovery.

Just to share what I know about the management of the company.

The company was founded by Mr Heng Kheng Seng, who was the Chairman of Penguin until he retired in Feb 2010. Mr Heng was succeeded by Mr. Jeffrey Hing, who was a non-executive director before that and the single largest shareholders of the company. Since then, Jeffrey Hing has increased his shareholding of the company from 16% to almost 20%, a sign that he is confident of the company prospect.

I suspect they could be some other unknown reasons on Mr Heng resignation. After all, he was only 60 when he retires. Having founded the company and worked hard for 38 years to build up the company, why would he want to retire at such a young age, and hand over the company to an outsider? He even disposed off all his shares in the company, probably to Jeffrey. Why cut it so clean? I do not know the reason, but I suspect it has to do with the company future direction.
Back to Jeffrey. He is a veteran in the marine and offshore industry with more than 30 years’ experience. He owns Trinity Offshore Pte Ltd, an OSV company. With his experience in the offshore industry, he started to change the course of Penguin, building up its chartering business and disposing off its ferry ticketing business. Today, these efforts are beginning to see results.

Jeffrey is an accountant by training. Together with James Tham, the MD of Penguin since 2008, the duo are running the company now. Both are young and have the energy to steer penguin to new heights.

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To my knowledge, Penguin only sold their retail ferry ticketing business to Batam, Bintan and Karimun. I assume Pelican Ship Management (subsidiary) still operates ferry services from Pulau Tekong to SAF Ferry Terminal back and forth. Seems like a stable revenue source. As a NSF, I noticed that the on-board staff were competent and the ferries were comfortable.

After disposing off the ferry ticketing business, the company had sold off some of its ferries. Currently, it still has 10 ferries left. 7 of the ferries are on contract to Mindef, and providing a stable recurring income. 3 are idle and waiting for opportunity to dispose off. The company made an impairment of $1.2 million in Q2 to these 3 idle ferries. Obviously, it will be a boost to its financial performance once the idle ferries are disposed off or put to use.

One more point to note. KS investments, a Keppel Company, is the second largest shareholders of Penguin, owning 6.24% of the company. Keppel is the largest offshore rig builder in the world, Penguin is the builder and charterer of OSV. It is a perfect fit.