I think higher value of the hedging instruments signifies greater deviation between the lock-in value and spot value. It don't really quantify the potential contracts in my opinion.
(30-04-2015, 02:05 PM)valuebuddies Wrote: [ -> ]I think higher value of the hedging instruments signifies greater deviation between the lock-in value and spot value. It don't really quantify the potential contracts in my opinion.
I have to agree with valuebuddies, the notional amount is more related to variation of the future, rather than related to margin locked.
Any expert to advise?
(vested)
2014 AR Notes to FS Pg 62
Derivative financial instruments
The Group uses derivative financial instruments such as forward currency contracts to hedge its risks associated with foreign currency. Such derivative financial instruments are initially recognised at fair value on the date the derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Notes to FS Pg 93
Forward currency contracts are used to hedge foreign currency risk arising from the Group’s sales denominated in USD for which firm commitments existed at the end of the reporting period, extending to October 2015.
The contract/notional amount of S$59,431k refer to the USD denominated firm sales order commitments secured by the Group at end Dec 2014. A ratio of derivative liability of 2,425k over 59,431k indicated a loss of 4.1% on the forward contract. This is in line with the strengthening of USD in Qtr 4 approx 3.9%.
USD movement
Per XE website
30-Sep-14 1.27589
31-Dec-14 1.32542 103.9%
31-Mar-15 1.37444 103.7%
(PS: Probably another big hit of Net Fair Value loss on derivative in FY2015 Q1 result)
In the AGM, management advised that 2014 crewboat production is half on firm order and half on built to stock. Despite management built to stock, it is noted that there is no unsold vessel sitting in Closing Inventories.
Based on management representation that there is no order cancellation todate, and the fast moving of any built to stock vessel, a guesstimate of the 2015 shipbuilding sales (at the minimum) is as follow:
SGD k
59,431 USD sales order (with firm commitment) - latest in Oct 2015 delivery 80%
14,858 Non- USD sales order (with firm commitment) 20% assumed
74,289 Total sales order 100%
74,289 Built to Stock (for sales)
148,578
(2014 Actual of 137,442k)
Despite the headwinds from O&G, high demand in patrol boat and new market Mexico penetration will compensate, also expanded capacity will allow for more slots for ship repair and maintenance service. Baring any adverse business conditions, Penguin is likely to deliver better than FY 2014, IMHO.
Performed a sanity check on the model used for a rough estimate of shipbuilding revenue based on contracted forward contract. Applying the same to the status 12 months back ie for FY 2013, the contracted amount of USD firm commitment sales value of S$70,652 (higher than that in FY 2014 of S$59,431), suggesting that the estimation model is flawed.
I guess it may still be of use, if we factor in the 3 Flex Ferries delivered in 2014 (IIRC), assuming that they are transacted in USD. (A check with 2013 AR indicated that forward contract are taken up for delivery up to Jan 2015 based on commitment received by end Dec 2013).
(22-05-2014, 10:01 AM)dydx Wrote: [ -> ]I guess what we should always bear in mind is that Penguin's boats are made of aluminium alloy (instead of steel) therefore are much lighter. As a direct result, the boats can run much faster on the same engine capacity, and therefore also cheaper to run based on fuel consumption/distance efficiency measurement. Maintenance cost is likely lower as aluminium alloy does not rust and is more resistant to corrosion.
Penguin's industry standard Flex-40 crewboats are run by a very small crew and typically can carry 78 to 90 passengers in great comfort, plus a good 60MT of palletised cargoes. Because the boats are fast and cheaper to run, I suppose charterers and fleet operators are driven to buy/own or lease and operate such boats mainly because of their great economics, as well as the much lower upfront investment cost per boat.
Of course, we should also bear in mind that Penguin's boats have proven to be flexible enough to play other and multi- roles, e.g. fire fighting, coastal patrol, stand-by vessel, etc.
Just wanted to share that, post agm, and through a supplier sharing in my field of work (in IT!), I came to realise that aluminum, rather than steel would be the material of choice for FSIVs. Aluminum does cost more than steel, but the benefits for this application are logical to me.. I understand more on the managements passion at the technical side of things.
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Whilst quite a number of forummers disagreed with my comments on Penguin...
There is one issue which they cannot disagree... i.e. Penguin, though a very small company, remains the last in its quarterly report. Giants like Keppel and the banks have announced their quarterly reports.... we still do not know when is Penguin going to announce its report...
Nonetheless, I am not hopeful of the outcome of Penguin's quarterly report in view of the repeated mentioning of head wind at its agm despite the very upbeat statement published in its web page in late January...
scratching my head over this,
Is this about trust or lack of it? if yes, just divest it first and see what happens down the road?
Money in the pocket is safest!
Otherwise, trust the management and enjoy the biz! down cycle already happening, so watch how the management reacts!
We are afterall, small owners of the company too!
Don't think the management will risk their reputations running the biz down with Keppel/Temasek holding % of the company.
(07-05-2015, 11:57 AM)xlandjy Wrote: [ -> ]Whilst quite a number of forummers disagreed with my comments on Penguin...
There is one issue which they cannot disagree... i.e. Penguin, though a very small company, remains the last in its quarterly report. Giants like Keppel and the banks have announced their quarterly reports.... we still do not know when is Penguin going to announce its report...
Nonetheless, I am not hopeful of the outcome of Penguin's quarterly report in view of the repeated mentioning of head wind at its agm despite the very upbeat statement published in its web page in late January...
A few more days we will get to review the Q1 result, which in all likelihood should not be too bad. Otherwise, Penguin's decent management and BOD would have issued a pre-announcement profit warning or something like an update. Rationally speaking, a later result announcement has no direct bearing on its content and its quality, or the quality of the business, as long as it is a well prepared document and the financial numbers are properly, conservatively and accurately complied in accordance with the prevailing local accounting standards.