Penguin International

[amperex]

Nevertheless, took a small bite this morning at 0.176. Would like to add more, but not sure if it is wise for such high concentration in a single stock.

It depends on how much of your net worth ( not including place of residence ) is in stocks. If it is only 5% to 10 % of your funds then the risk is acceptable. If in the extreme case you have 100% of your funds in stocks, then I think you have to be careful if one third of it is in one counter.
Of course it also depends on the absolute amount. If you have just started work and you put all your $10,000 savings in stocks, losing $3300 will not hurt you too much over the long term.

[CityFarmer]

I bought significantly more @0.176 today. The 1Q result is not good, but not as bad as Mr. Market has reacted.

Maybe it's just me and my bad karma with "shipping" stocks. I've lost money on all the shipping stocks I've bought so far!

Cyclical industry requires a cyclical approach. Value investment approach does not apply. I have long stay clear of cyclical stocks.

Shipping stocks as I have mentioned many times over is 7 grinding bears and 3 sharp bulls. More often than not attempting to ride the bull cycle results in more bull Sh** than real results. Got to be a sharp shooter with cyclicals.

Peter Lynch applies value investing on cyclical stock, but I have to admit that it is probably the toughest categories of stock to invest. It is easier to invest on an up-cycle, with a long term perspective with the strongest player, IMO.

[LocalOptimal]

The last 2 quarters have shed a light on some of the management decisions, and this has caused a shift in fundamentals IMO. I have since adjusted my fair value and also my MoS. At $0.18, it's not attractive for me to top up more, especially during this volatile period of oil crisis.

I will maintain my non-core holdings and wait and see. Q2FY14 and Q3FY14 will be hard to top by the next 2 quarters.

[brattzz]

it's a cyclical biz, so up and downs are expected...now is definitely down-trend,

Spot the next up-trend will we?

[shawn_sass]

What I find peculiar is how with seemingly reported "sobering sentiments", the following has occurred:

- In 2014, they underwent infrastructure upgrading, expansion and works in general. From AR: "From 1Q15, the combined capacity of our two shipyards will be 50 vessels
a year" -> Could this be the S$13.3mil Capex that we are seeing in 1Q15? This is significantly more than normal quarterly capex spending, and I'm assuming this is the last bout of Capex because there will not be a need for more expansion if demand for building is dampened. Why will management do said expansion in the face of strong headwinds?

- Inventory is sitting at S$60.2mil, which represents a large stock, perhaps the largest Penguin has ever held yet. Either these boats are earmarked for sale or they are just meant to sit around to stock up the shelf. If the former is true, then are we just not seeing the profits realised yet but sometime in the near future. What does "build-for-stock" really mean here? Would management be able to deliver the remaining stock?

(vested but cautious)

[bear]

If I didn't make a mistake,I think the increase in revenue of 1Q2015 as compared to 1Q2014 is due to the increase in the number of non oil & gas work boats delivery as well(i.e. the Flex Fighter from African customers),whereas the decrease in other operating income due to the lack of disposal of any crew boats is because the primarily composition of the offshore charters are for the oil & gas customers.

Throughout these few months bro Bluekelah has really hit the nail on the head when he forecasted that Penguin will be facing downwind and that EPS will vaporize hence it is not really prudent for us to use the low P/E ratio with respect to FY2014 EPS results to make a valuation of this little penguin.

On the other hand,the comments by bro dydx and Cityfarmer over the last few months really makes a lot of sense to me,in terms of the quality of Penguin's business and ignoring the FX loss(I believe the accounting treatment has been explained by Mr Ong Kian Ming) and its ability to generate decent revenue is commendable and shows something about the strength of the business.Sharing the same sentiments with CY09,I really hope the management can keep track of the cash level especially with a current high level of PPE compared to previous period.

I believe Mr James is not making any misleading statement because as of last November interview with The Marine Executive, Penguin did receive orders from companies set for delivery in FY2015(up till year end). The orders has been confirmed and hence on the company website we can see the announcements of more than 40 boats set for delivery in year 2015.The great disappointment that Mr Market feels is the lack of disposal of any boat in its charter,which I think is valid.

http://www.maritime-executive.com/featur...2014-11-22
“In Penguin’s case, we have yet to see a drop in crew boat demand as we are still taking orders right up to the end of 2015. But we are not immune to negative oil price sentiments."

Interestingly previously,we thought that the non oil and gas boats are something that is good to have but now it seems that this become essential for survival instead....

For now I will wait till the end of the year to see how the situation plays out,depending on the situation I may continue to add on this little penguin to my portfolio if I feel the high level of pessimism and low prices do not justify the true value of the penguin in the longer term.

(Vested,monitoring the situation and will consider adding more at latter part of this year)

[Ben]

What I find peculiar is how with seemingly reported "sobering sentiments", the following has occurred:

- In 2014, they underwent infrastructure upgrading, expansion and works in general. From AR: "From 1Q15, the combined capacity of our two shipyards will be 50 vessels
a year" -> Could this be the S$13.3mil Capex that we are seeing in 1Q15? This is significantly more than normal quarterly capex spending, and I'm assuming this is the last bout of Capex because there will not be a need for more expansion if demand for building is dampened. Why will management do said expansion in the face of strong headwinds?

- Inventory is sitting at S$60.2mil, which represents a large stock, perhaps the largest Penguin has ever held yet. Either these boats are earmarked for sale or they are just meant to sit around to stock up the shelf. If the former is true, then are we just not seeing the profits realised yet but sometime in the near future. What does "build-for-stock" really mean here? Would management be able to deliver the remaining stock?

(vested but cautious)

From you posting, it is obvious that you are new to Penguin. There are a lot of information in this thread n if u make the effort to read it, you will know a lot more of this company.

[greengiraffe]

Penguin reminded me of my bad experience with Jaya.

Obviously the model is different as Penguin focuses on small boats. I suspect the demand of such boats ties in with the tail end of O&G support industry equipment - rigs maybe commissioned before the need for vessels for transportation of workers to them.

Being a specialised manufacturer of boats, they would just have to make hay while the sun shines just like any other business.

As for build for stock - i take it literally as speculative builds. Cannot sell then add it to ownership and run a lease business. Unfortunately, when overall business is down, outright buyers will be scarce not to speak of leasing.

Anyway, the annual report offers very little guidance - ie its a black box. Share price cyclicality on top of business cyclicality will result in future discount rating on transparency of the company.

For a start, Penguin just happen to be a situational stock - perhaps aided by gush of liquidity starve of investment ideas.

Odd Lot Vested
More than a decade

[LocalOptimal]

What I find peculiar is how with seemingly reported "sobering sentiments", the following has occurred:

- In 2014, they underwent infrastructure upgrading, expansion and works in general. From AR: "From 1Q15, the combined capacity of our two shipyards will be 50 vessels
a year" -> Could this be the S$13.3mil Capex that we are seeing in 1Q15? This is significantly more than normal quarterly capex spending, and I'm assuming this is the last bout of Capex because there will not be a need for more expansion if demand for building is dampened. Why will management do said expansion in the face of strong headwinds?

- Inventory is sitting at S$60.2mil, which represents a large stock, perhaps the largest Penguin has ever held yet. Either these boats are earmarked for sale or they are just meant to sit around to stock up the shelf. If the former is true, then are we just not seeing the profits realised yet but sometime in the near future. What does "build-for-stock" really mean here? Would management be able to deliver the remaining stock?

(vested but cautious)

This is a reason why I believe there could be a slight change in fundamentals. If Penguin had overestimated their demand, it could be in serious trouble. Sure, it is in a cyclical business. But prudent management will steer the company through bear periods. If Penguin is facing record headcounts and capacity going into this storm, this could spiral out of control.

That being said, I'm aware of Penguin's attractiveness as a crewboat supplier. But the question is, will there be enough demand to utilize their huge CAPEX and a possible fleet of idling stock?

(Vested, cautious as well.)

[CityFarmer]

What I find peculiar is how with seemingly reported "sobering sentiments", the following has occurred:

- In 2014, they underwent infrastructure upgrading, expansion and works in general. From AR: "From 1Q15, the combined capacity of our two shipyards will be 50 vessels
a year" -> Could this be the S$13.3mil Capex that we are seeing in 1Q15? This is significantly more than normal quarterly capex spending, and I'm assuming this is the last bout of Capex because there will not be a need for more expansion if demand for building is dampened.

The upgrades required much less than the $13.3 mil spent, and has already accounted in FY2014. The bulk of capex in 1Q2015, was on the expansion of internal fleet.

"The net cash of $13.3 million used in investing activities arose mostly from the acquisition of new crewboats for the Group's fleet." - page 15 of the 1Q2015 report

- Inventory is sitting at S$60.2mil, which represents a large stock, perhaps the largest Penguin has ever held yet. Either these boats are earmarked for sale or they are just meant to sit around to stock up the shelf. If the former is true, then are we just not seeing the profits realised yet but sometime in the near future. What does "build-for-stock" really mean here?

Typically, the inventories in Penguin balance sheet, are mostly work-in-progress. A increasing inventories mean more work in progress. We have not seen completed vessel as inventories for Penguin, IIRC.

We do see the receivable day shorten, and payable day has been lengthen. It has improved the cash flow, which can be observed in the CF statement.

I am expecting 2Q sales better q-o-q, base on the inventories. The concern is on the margin, which 1Q GPM and NPM were deteriorated.

(vested)