The key question to current investors is this: Given the outlook and what Penguin's mgmt is doing, is the stock worth its value at 0.13 per share? Opinions?
(31-03-2016, 08:57 AM)CY09 Wrote: [ -> ]The key question to current investors is this: Given the outlook and what Penguin's mgmt is doing, is the stock worth its value at 0.13 per share? Opinions?
In my opinion, yes it is worth at least 13 cents a share. At current prices, I think the poor industry outlook has been priced in. With a net cash position and motor launches held at production cost less depreciation, there is limited downside. Besides, it would not hurt to hold on to the shares and see if the uptick in customer deposits translates into a strong first and second quarter. It is unlikely that the next quarter will be as bad as 4Q15 which started with $0 in customer advances.
Going forward, I would hope for the management to execute on the strategic initiatives discussed in the Annual Report and to put more effort into the quarterly financial reviews and market commentary. In my view, the lackluster effort at the quarterly MD&A, combined with gloomy commentary and contradictory fleet/yard expansion, unnecessarily punished shareholders who might have wanted to re-balance their portfolios during the recent months.
In terms of positives:
1. The confirmed order for 3 more ferries.
2. Although the crew boat market is bad, there is some substitution of trips previously by helicopter with cheaper crew boat trips. In this market, anything helps.
There seems to be a large degree of hunkering down and waiting for competitors to go under and the market to improve. Tough, but realistic in this market.
Lets hope that some more of those tenders for ferries become firm orders.
(vested)
Looks like the Oil crisis has forced Penguin to step up their product diversification:
Marketing to government departments, local and overseas:
We have leveraged our track record to participate in several government tenders for patrol boats, ferries and search-and-rescue vessels. We hope to make a breakthrough this year.
Penguin has posted a video on their new-design Flex-25 CAT aluminium Catamaran Fast Multi-Role Support Vessel.....
http://www.penguin.com.sg/vessel-specs/flex-25cat/
which is also available for charter.
Given enough time and marketing effort, there should be growing demand for such high-spec, high-performance, versatile small vessels. This should be the case for other Penguin vessel models like the proven Flex-40 (in 3 variants of different engine types), Flex Fighter, and Flex Ferry.
Notwithstanding the prevailing depressed state of the oil & gas market, and Penguin's proposed 3-into-1 share consolidation, without any fanfare, Mr Market seems to have started to work on Penguin, possibly and hopefully driven by its longer-term business fundamentals and current grossly under-priced stock price..
AGM - Q and A session about 1 hour. Some brief points for sharing:
Key takeaway:
1. Outlook – Strong headwind of intensity equivalent to that of cyclone. Reality – Very challenging. Not only O&G, general shipping also badly affected. Customers take longer to commit to capex spending.
2. Interest in crewboat has dried up. Some customers cancel order and forfeited their deposits of $2.5m (3 vessels of varying degree of completion).
3. Chartering has poor prospect.
4. Repairs – mainstream, more repair jobs.
5. Management is prepared for the onslaught, has expanded from single product (crewboat) to less lucrative vessels (ferry and patrol boats), and moved from O&G industries to government projects (illegal fisherman/immigrant/intruder).
6. Cost cutting measures are also taken.
7. Build for Stock business strategy has stopped since mid 2015.
8. Vessel stock in the water. There are some interests out of Africa, in discussion for some of the vessel over pricing, but not going for fire sale. Any sale transaction has to be yield positive.
9. Term Loan contemplated 2 years ago for expansion of own charter fleet.
10. Crewboat enquiry out of Mexico - no more enquiry with the depressed O&G
11. Crewboat delivery in 2015 – about a dozen compared to two dozen in 2014.
12. Max Capacity of the two sites – 50 mid sized fleet, meaning severe under-utiliation (in the previous AGM guided at 90% utilisation).
13. Pelician Fleet – increase from 11 last year to 15 vessels of which half are unchartered (15 not inclusive of 2 designated for sales).
14. Pelician Fleet has unique features, such as bigger engine size, equip with fire fighting ability, used to showcase new design product.
15. Not adding more interco order for Pelician Fleet at the moment.
16. Strategic island investment – 30+30 years lease. Will go slow in investment. Can be used as parking lot for idle vessel to collect rental income.
17. Alternative application of crewboat – working hard to put idle vessels to work
18. Exploring other opportunities for patrol boat/search and rescue/crewboat/ferry. Some may have positive outcome, will announce in due time – Aka Datang
19. Order - 3 ferry order with Sindo Ferry
20. Biz Strategy shift from Build-for-Stock to Build-for-Order. Need some time to effect the transition.
Shareholder request
1. Consistent dividend policy.
2. Presentation of Key Development and Highlight before meeting resolution.
On the whole, some disappointment by shareholders over the $0.0025 dividend and the share consolidation ratio. Management appear calm and expressed cautious optimism (to manage expectation) over the long term business prospect – in for the long haul and will survive the crisis.
Just sharing
Vested
Yoyo thanks for sharing, very sobering AGM for the bulls here on VB i reckon.
I had previously posted long before on the worsening picture for OnG and Shipping markets which would very likely affect Penguin despite its so called "niche" market and having a "moat". THe points from the AGM seems to confirm that.
TOP DOWN analysis when doing investing does have its merits as well.
Good case here to show that receding tide will sink most boats.
ya, problem is why mgt take so long 2-3Qs to come to reality? passive? lack of experience? anyway, frog is cooked now, so just hang in there as the cold winter just starts..... :O
Mgt probably knows long time ago, just wait till now slowly break the bad news. That's pretty normal.
Question is penguin a good buy now? Probably as div hermit said at 7-8 cents it will be attractive enough.
P.S. I am quite surprised it didn't join in the oil price surge party today.