Penguin International
09-10-2019, 09:45 AM
This kind of sustained buying in the past month - when the overall market has been down and remained depressed - in a way has confirmed the quality of Penguin's business model and management. It is a strong indication that Penguin has attracted the eyes of more and more investors, some of them are prepared to pay the higher price because they feel/believe that the prospects of the underlying businesses and its continued profitability are good.
09-10-2019, 10:34 AM
(09-10-2019, 09:45 AM)dydx Wrote: This kind of sustained buying in the past month - when the overall market has been down and remained depressed - in a way has confirmed the quality of Penguin's business model and management. It is a strong indication that Penguin has attracted the eyes of more and more investors, some of them are prepared to pay the higher price because they feel/believe that the prospects of the underlying businesses and its continued profitability are good. Yes, I think there are some serious accumulation going on.
09-10-2019, 06:23 PM
CY09, I hope you are still reading this. Being a long time holder, would be great to hear your view.
Please do your own due diligence. Any reliance on my posts is at your own risk.
09-10-2019, 07:07 PM
I dont have much to add. Penguin does have a niche position in the small crewboat space. That's its moats. I still hold some shares
09-10-2019, 08:01 PM
(09-10-2019, 07:07 PM)CY09 Wrote: I dont have much to add. Penguin does have a niche position in the small crewboat space. That's its moats. I still hold some shares Hope you managed to claw back your invested capital and more. It’s been a long time since then I suppose. Please do your own due diligence. Any reliance on my posts is at your own risk. 
why Penguin?
1. Based on recent results as well as dividend paid, there is a upward trend. The earning trend is actually quite spectacular, given that O&G industry had not fully recovered and quite a number of shipyard is still folding down. 2. Well managed by Professional with lots of experience in Marine business. Let me repeat what they did. By selling away it's ferry business (to batam), it's gain 2 loyal partners. Buy boats, repair boats, etc. You can imagine my astonishment when I learn about this "strategy" to convert competitors to become customers. 3. Financially - super prudent Debt must be reduce to increase resiliency especially in a cyclical industry. Penguin long already understand that. All its build-to-stock boats were funded using it's cash flow/reserve. That's the reason why it can withstand the O&G crisis without much harm. Most other shipyard actually dig deep into debt and build boats during good time. Unfortunately, when the down cycle come, the entire company (and shareholders) go ka-put. 4. Standard boat vs custom boat - diversified It seems that the take up rate is quite ok. Given some time, this standard boat might gain worldwide/global customer acceptance. Specialist custom boat seems to be Penguin growth area - diversified beyond O&G industry. This could gives Penguin a chance to maintain a stable income. Time will tell whether the early success from Taiwan and Australia might morph into something big. Especially the Australia orders looks very interest and deserve a deep dive. 5. Macro Polo Marine - Passive or Strategic investment? $60m injected into MPM from non shipping company except Penguin. Out $10m, Penguin as a company paid $8m, while Jeffrey paid $2m. Jeffrey says it's a passive investment. Do you think the tycoon who injected the $$$ think so too? If MPM made it, everyone will be happy. They get back their capital with interest. If MPM did not make it, everyone will get something back. Penguin will be the key beneficiary. Head you loss, tail I win. I wonder what was inside these tycoon mind when they heard that Penguin is in it as a "passive investor". Of course, they will know immediately if I says that Penguin is exploring building up a steel boat business. In this case, the passive investment into MPM become very obvious. It's a strategic decision to seat in the board of MPM. I says, head you loss, tail I win. What say you? #6 O&G turning up - what happen to other shipyard? Penguin is in the best position to benefit from O&G pickup. It will be difficult to say about other shipyard which is still recovering from their debt. Will they take on more debt in order to build boats for new order? Will their bank provide the loan that they needed most - when O&G turn? Thank you valuebuddies and VB.com I pen down my thinking process as part of my learning journey. Thanks for reading and hope you enjoy it as much as I do. =========== Signature =========== 感恩
UOB Kay Hian Initiation Report on Penguin
Riding The Wave, Backed By Favourable Industry Trends (click here to read 21 pages report) Sifu dydx posted on UOBKayHian Initiation report last week. I only have a chance to digest today with present surprise. It's clear that our valuebuddies in UOBKayHian had put in sufficient effort in research and talking to Penguin management. Really appreciate and thank you for your kind sharing. I'm not sure exactly why UOBKayHian get paid for writing this report. But, I do acknowledge that it's a piece of carefully crafted arts which deserved to be (paid) studied in details. What I am impressed is our valuebuddies in UOBKayHian had spend time to carefully chose the right words/phases to explain their views. These carefully chosen words/phases is seldom seen in other financial bloggers or analysis. I suppose, if the writers are so careful in choosing their words/phases, then we as a reader should put in extra effort to study in details. I had extracted and re-arrange some of their points into my thinking process. I take great care not to twist their meaning. If I did, kindly excuse me as I did not do this deliberately. It must be due to my vested (and tinted) view. Strong Balance Sheet Penguin’s strong balance sheet, unique business model and niche expertise have helped it to weather tough times such as the oil crisis in 2015-16. 2Q19 balance sheet with
Due to the recent O&G crisis, Penguin has been gaining market share in Singapore from competitors that exited the market. With a healthy delivery of about 30 vessels for 2019 vs 15 vessels for 2018. Growth Engine #2 New Products BTO Build-To-Order Already an expert in aluminium security boats and offshore oil & gas (O&G) crewboats, Penguin has started to expand its product portfolio to include fire fighting ships, windfarm vessels and passenger ferries. Penguin delivered several of these vessels in 1H19 and is poised to secure more build-to-order contracts for new products in the future. As at Oct 2019
Nigeria, contributed 36-60% of Penguin’s revenue, has always been plagued by piracy off its coastal waters. Penguin’s Flex Fighters provide Nigerian boat owners with the speed and armour they need to combat these pirates. With the ongoing reported incidents due to pirate attacks, Penguin stands to benefit from Nigeria's predicament. Take note: Each Flex Fighter is US$4-5m. 20-30% deposit is collected upon order and paid in full upon delivery. Growth Engine #4 From Sky to Water In the light of a fatal helicoper accident in Norway during Apr 16, more O&G companies are phasing out helicopters in favour of crewboats. Petronas and ExxonMobil (major chartering clients) have cancelled multi-million dollar helicopter contracts with MHS Aviation due to safety issues. Instead of helicopters, more O&G companies choose to adopt high-speed crewboats as the main mode of offshore transportation between oil rigs. Enjoy: Twice "Likey" Keep wanting to show it all again and again Every single little thing Inside the small screen, I wanna be the prettiest Yet still, I hide my feelings deep inside =========== Signature =========== 感恩
Is it time to sell Penguin?
52week High: 69.5 52 week Low: 26.0 Last Sale: 67.0 Div yield %: 1.9 P/E: 10.9 PB: 0.9 From the attached chart, its clear that sooner or later we will be asking each other when should we sell Penguin? 3 scenario #1. When the price hit some magical number eg. 70 cents (2-bagger) or $1.20 (4-baggers). #2. When the facts change, I change my mind. #3. Risks Playbook for scenario #1 1. set a number eg. 70 cents or $1.20 2. when reached, sell 50% (for 70 cents) or sell 25% (for $1.20) to recover your cost 3. ride the remaining stocks to moon Playbook for scenario #2 1. identify the relevant facts to monitor eg. MOS, growth plan, revenue, cash etc 2. cross references these quantitative and qualitative facts against our expectation. 3. when situation change/deteriorate, adjust and sell the holding according to how bad is the situation. Playbook for scenario #3 1. identify the major (and specific) risks of Penguin 2. monitor any major changes in economic, industry and business of Penguin 3. sell out upon confirmation of the possibility of the risks (and not let the risks developed). Any thought, valuebueddies? =========== Signature =========== 感恩 RISK#1 Under diversification of geographical markets. From 2013 to 2018, Nigeria accounted for 36-60% (excluding 2016) of Penguin’s total revenue, making Nigeria a huge market for Penguin. As Nigeria’s geopolitical and economic issues may affect demand, the overdependance on Nigeria leaves Penguin at risk. This became evident in 2016 when Nigeria implemented currency controls in the country. Revenue from Nigeria plunged from S$43.1m in 2015 to a mere S$16,000 in 2016. RISK#2 Forecasting demand for build-for-stock vessels. The success of Penguin’s build-forstock model depends on the accuracy of its demand forecast for its Flex vessels. Not only does the build-for-stock model reduce waiting time, it also provides Penguin’s customers with financing, allowing Penguin to sell at a premium. However, this contains some risks as demand may change quickly due to unforseen predicaments, leaving Penguin with excess unwanted stock. Nevertheless, management has stated that if this situation ever occurs, Penguin could convert some Flex vessels into Flex crewboats, adding them to the operating fleet at minimal costs while earning chartering revenue. RISK#3 Volatile oil prices. Demand for offshore O&G chartering and shipbuilding is heavily influenced by oil prices. The volatility of oil prices may impact offshore O&G activity, resulting in lower sales for shipbuilding and chartering. Therefore, Penguin’s revenue performance may be subjected to the price movement of oil. (click for 21 pages paid report from UOB KayHian)
20-10-2019, 10:28 PM
Just want to add a point. As investors we should not under-estimate what a smart, experienced and driven management can do to a well-positioned business over time in creating value/wealth for its shareholders. Serious and experienced investors know the benefits of taking a longer term view on a business to allow its management enough time to grow it properly and to raise its profits, in a sustained way.
Now that we have UOB Kay Hian pitching a target price of $0.85, a relevant question to ask is whether Penguin's management and BOD would support selling the entire business for $0.85/share or $147.5m, if a suitor were to make an offer for the company now. I bet their answer is likely to be a "No".
21-10-2019, 01:02 AM
(20-10-2019, 10:28 PM)dydx Wrote: Just want to add a point. As investors we should not under-estimate what a smart, experienced and driven management can do to a well-positioned business over time in creating value/wealth for its shareholders. Serious and experienced investors know the benefits of taking a longer term view on a business to allow its management enough time to grow it properly and to raise its profits, in a sustained way. Penguin is in a cyclical industry. I have held this stock for more than five years. Just barely break even now. Perhaps we need to temper optimism with caution. |
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