AGM - Q and A session about 1 hour. Some brief points for sharing:
Key takeaway:
1. Crewboat enquiry out of Mexico - potential new market
2. More ferry enquiries since the delivery of the Ferry (Horizon) in 2014
3. Half of crewboat delivery in 2014 is Flex Fighter, main market Nigeria (Africa)
4. Recent out of court settlement is not that material, the 2 vessel already written down to scrap metal level, still trying to maximise value of its disposal.
5. Dec 2014 WIP relates to more than 10 vessel under construction.
6. 1st in crewboat with about 40% global market share. The balance shared by about 12 players.
7. Vessel construction - half with orders and half built for stock.
8. Management re-emphasize to focus more on business (than share price). That is do more, talk less.
9. First 100th Flex is still on target in June/July 2015.
10. Though 2015 vessel capacity is more than 50, does not mean to produce 50. However, currently, the Spore and Indonesia yards are at 90% utilisation.
Shareholder request
1. Review of Forex handling
2. Increase of dividend preferably 1/3 of profit, over 2 dividend payments annually
On the whole, management appeared optimistic.
Recalled from memory.
Yoyo - that's really fast!
Updated:
(Thanks to Stephentoh for "choping" seat and sharing some earlier Q&A as I was slightly late.)
Excuse if my notes are not so word-accurate as I am not deeply familiar with O&G/Shipbuilding terms.
My notes, supplementing Yoyo's main points:
1. Answer for skyn: Management mentioned the main portion of boats are to oil related customers, and the rest to non-oil related customers. No direct answer here.
2. Growth of Penguin expected to be organic barring any good developments. Management focus is to build better crewboats, particular focus to high speed vessels.
3. One of Penguin's advantage is that they are an aluminium boat builder and possesses knowhow to build boats with speed and efficiency. China shipyards may attempt copying but
a. Crewboat revenues are lower than large ships in general for large shipyards to do
b. These shipyards do not have the tools that are conforming to standards.
4. Flex Fighter receving more requests in past year.
5. Both shipyards have a possible capacity of 50+ vassals (per year?)
6. Malaysia credit risk (pg 108): Increased due to longer payment terms.
7. Insurance claims (pg 74): Normal amounts from course of business.
8. Penguin practices hedging at time of signoff of contract. As Yoyo mentioned, was a point of contention from some shareholders.
9. Income from ship repairs and maintenance (pg 74) fell as the shipyard slots were heavily used for building in FY2014.
10. Ferry and charter services (pg 103) is turning a corner (going into black). Currently Penguin has 13 Charter boats and around 70% utilization.
11. R&D - not fixed but significant profits. Management is mindful of not overspending.
Yoyo ... thank you for your updates. Appreciated.
(28-04-2015, 02:21 PM)josephyeo Wrote: [ -> ]Yoyo ... thank you for your updates. Appreciated.
I left the agm with deep disappointment. To start with, I am rather disappointed with the approach of the Directors adopt in managing a listed company.
A listed company is also known as a public company... in other words, you are PUBLIC and should be known and recognise in PUBLIC. But, the Chairman and CEO repeated highlight their preference for being LOW KEY.... MORE ACTIONS, LESS WORDS ...
As I have mentioned in my earlier post, they should take the company PRIVATE instead of keeping it PUBLIC.
Being a public company, it is inherent upon the management to go for HIGH PROFILE. The more Penguin is known the better. Better in the sense more people including business people will know the company and bring about more business. It will also help to bring the share price to a level which is equal to its merits. Furthermore, it will facilitate the raising of funds easier and etc.
Very disappointed indeed.
(28-04-2015, 05:04 PM)xlandjy Wrote: [ -> ] (28-04-2015, 02:21 PM)josephyeo Wrote: [ -> ]Yoyo ... thank you for your updates. Appreciated.
I left the agm with deep disappointment. To start with, I am rather disappointed with the approach of the Directors adopt in managing a listed company.
A listed company is also known as a public company... in other words, you are PUBLIC and should be known and recognise in PUBLIC. But, the Chairman and CEO repeated highlight their preference for being LOW KEY.... MORE ACTIONS, LESS WORDS ...
As I have mentioned in my earlier post, they should take the company PRIVATE instead of keeping it PUBLIC.
Being a public company, it is inherent upon the management to go for HIGH PROFILE. The more Penguin is known the better. Better in the sense more people including business people will know the company and bring about more business. It will also help to bring the share price to a level which is equal to its merits. Furthermore, it will facilitate the raising of funds easier and etc.
Very disappointed indeed.
Very interesting view. A "public company" shouldn't mean "publicity".
Value investors focus on fundamentals, rather on popularity of a stock. Management talks less, and work more, means better fundamentals, which is good to value investors.
(vested)
(28-04-2015, 05:04 PM)xlandjy Wrote: [ -> ] (28-04-2015, 02:21 PM)josephyeo Wrote: [ -> ]Yoyo ... thank you for your updates. Appreciated.
I left the agm with deep disappointment. To start with, I am rather disappointed with the approach of the Directors adopt in managing a listed company.
A listed company is also known as a public company... in other words, you are PUBLIC and should be known and recognise in PUBLIC. But, the Chairman and CEO repeated highlight their preference for being LOW KEY.... MORE ACTIONS, LESS WORDS ...
As I have mentioned in my earlier post, they should take the company PRIVATE instead of keeping it PUBLIC.
Being a public company, it is inherent upon the management to go for HIGH PROFILE. The more Penguin is known the better. Better in the sense more people including business people will know the company and bring about more business. It will also help to bring the share price to a level which is equal to its merits. Furthermore, it will facilitate the raising of funds easier and etc.
Very disappointed indeed.
As many of their boats are sold or leased far away (e.g. Nigeria) having a high profile in Singapore generally does not help much. What they need is a high profile with their clients and prospective clients. At 40% global market share for crew boats, it is self evident they are doing a great job within the people/companies that matter to the business. As for raising funds, they don't need to.
What matters is profits and dividends. We need to assess how these might change, and how market conditions might impact them. That is where feedback from management can help. Some useful information reported from the AGM.
A Public company don't have to be listed. They are 2 separate things
Instead of "publicity" I think the correct word is "transparency". I support the view that being a public company, transparency is important. Low level of transparency means higher investment risk thus discount on the share price. That's why Penguin is priced at this level isn't it?
I felt differently after attending the AGM. I do not deny that the management is very prudent and conservative in many aspects which includes answering questions especially with regards to the number of crew boat being sold/ build. Xlandjy got a point that promoting the company more aggressively can have its merits but this also implies that when more people get to know penguins and its business, it is inviting competitors into the industry and compete with them. I would rather they capitalize on extracting value with the business than focusing on publicity. No doubt publicity is beneficial for shareholders but at the same time this invites unwanted competitions to penguins. I am sure penguins managers had actively working hard to secure orders from different parts of the world ( explore markets out Nigeria and recently Mexico) and constantly modify their fleets to launch better series of crew boats for demand. I like the point where the company constantly upgrade, innovate and produce boats that have a series of important functions (speed capabilities, cargo deck space, anti piracy capabilities) , this gives them the edge and differences in the boats they build.
I would like to share with you guys some highlights during the AGM to shed light going forward in response to the weak oil gas outlook. Mr James and Jeffry have been honest that indeed they are facing headwinds similarly to peers in the industry and it will be a more challenging environment compared to last year, penguins are not immune. However, it is good to know that penguins being an operator and shipbuilder , they have competitive cost of production which gave them some leeway with pricing. Moreover, the management have express that even in the event of unforeseen bad outlook they have the ability to react fast and look into creating other types boats for the market and enter contracts that may or may not enjoy the sweet margins but still profitable. They are closely monitoring the situation but for now no changes in the business. Of the upmost concern, there is no cancellation of boat orders of today. The 100th flex boat will be on schedule to be ready in June /July. Regarding how is the "build to stock approach" works, the ships are built where some are contracted while some build for stock.
Though the management do not divulge much on confidential stuff but the willingness to share more about its operations its crew boat during the tour around say a lot to me. Mr James to me I would say a very friendly MD who believes in penguin , willing to go the extra mile to try answer the shareholders concerns.
Also to clear the doubt on the forex loss. The type of hedging policies penguin adopt as a listed company is parallel to bigger and more reputable coys (I.e sembcorp ,keppel, SPC) , it serves to clock in the profit margin but at the same time will have to be recorded into accounting practices. But it's not a " loss " as these "losses" will be realized as profit eventually, this how hedging works
To conclude I left the AGM with great confidence despite coming headwinds to O&G.
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