Penguin International

[LocalOptimal]

If we are to use Nam Cheong as a comparable to Penguin, Nam Cheong's full year results was 5.45 EPS and NAV of 23 cents. At current price of 32 cents, this means Nam Cheong is at a P/E of 5.87, P/B of 1.39 and div yield of 4.6%.

As explained Penguin's EPS is expected to be 5 cents, NAV of 21.5 and 1 cent dividend. On these metrics, I expect penguin to be about 29 cents. However, like the methodology of "Cap rate" used by property valuers, we have to adjust for their differences. Given Penguin's larger exposure to Africa, smaller market cap but strong balance sheet and lower payout ratio indicating prudence, I will adjust downwards by 5%. Therefore, Penguin should be about 27.5 cents if the FY results are within what I expect.

If we are to judge Penguin as a standalone, for the company to be selling at a forward P/E of 4.4 is something incredible. Its like the market seems to know Q4 earnings will be poor. If we assume Q4's EPS as zero, Penguin will be at a P/E of 5.7. However for a company whose earnings will grow at a moderate rate, to sell at P/E below 6, investors are definitely not overpaying for its growth.

Moving forward, it will be good if Penguin's mgmt can reveal their order books amount. This will enable us to keep a better gauge of its profitability.

<added more at 0.215>

Been queuing at 0.215 for many days. Not many willing sellers.