Penguin International

[xlandjy]

But for all we know the management could have already decided to stop such hedging forex contracts and allow Penguin to ride on the current rising trend of the USD/SGD rates. If this is the case, and if the USD continues to appreciate vs. SGD, Penguin's OP and margins would stand to enjoy an extra boost from the positive forex impact. All these will depend on the management's forex forecast and decision whether to hedge or not.

No reasonably responsible BOD will do that and if that is indeed the case, I would start to question their judgement as this is akin to 'betting' on the direction of the USD.

Penguin is in the business of building AHTs and Crew Boats not FOREX trading. If the bulk of their revenue is denominated in USD, then they must ensure that they adopt the appropriate hedging forex strategy to smooth out fluctuations. If this is done well, then the overall impact should be minimal.

So barring any unforseen events, I agree with your assessment that it should not impact Penguin bottomline adversely.

I am vested in Peguin and hope we can find out from the management the following at coming AGM:

(1) What is the policy wrt the management of forex?
(2) The cause of the recent forex loss? Lessons learnt and etc.
(3) The management, being a listed company, should be forthcoming with the investment fraternity. Peguin is not a nuclear weapon company and does not have to operate under severe secrecy.
(4) What is the dividend policy? Can we set at 20, 25 or 30% of the earnings as dividend?

If the management refused to accept the above, I would humbly suggest to them to buy out the shares of the company and have it deleted.