Penguin International

[Squirrel]

Lest some of my comments be misinterpreted as endorsing an investment in Penguin -- which I am not, especially after the run up in share price over the past few months -- I should add some comments.


1) Given the very low dividend payout ratio, but primarily my lack of knowledge on the market and competitive landscape of small-scale shipbuilding in the region, I will only put a very small portion of my money in such a company -- if its shares are sold at a price that is to my satisfaction -- as I have earlier stated. How much am I willing to pay? Refer to earlier posts.

2) Penguin's recent history has indeed shown it to be very conservative in its financing. But this can also be said for many other listed companies in Singapore. In fact, I am quite confident than more than half of the listed companies in Singapore will also be around in the next 10 years, including those with less than pristine balance sheets. 

SPH, M1, Starhub, HPHT are but some of the companies I think will still be around. Small caps like Tiong Woon, Sarine, Khong Guan, OKP, and and most of the palm oil plantations. How will they do? I don't know. But I do remind myself not to confuse a company's existence with a company's prosperity. 

3) When I remarked that "Penguin is still in growth mode," the point is made in reference to its reinvestment of profits into the business -- in the form of working capital (more boats) and investments (in new yards, or in shares of other companies) -- to the effect that the shareholder receives little/no dividends. 

Hence, growth in capital spending should be understood to be very different from growth in profits and dividends. Growth in profits and dividends is what investors ultimately want, but for Penguin, has yet to materialise. Other examples of companies which I believe are also in "growth mode" include Uber, WeWork, Razer, and Carousell. How much profits and dividends will these companies, and Penguin, be throwing up in the future? That is something for prospective investors to find out for themselves.


I think I have been clear in my elaboration on these 3 points in previous posts. So I hope my comments will not be taken out of context.

If a (Penguin) shareholder is looking for assurance -- perhaps so as to sleep soundly -- my opinion is to sell your shares.

Hi karlmarx,

If someone has read through the thread, its more than obvious you are not advocating a buy on this company even before the run up, much less now. Its even more obvious for me since that is when we first crossed swords/opinions. I do get however, your stand of not having your posts misconstrued as endorsement for Penguin. That's very fair, as it can be easily misinterpreted to be the case.

I would like to however point out on your comment of "Hence, growth in capital spending should be understood to be very different from growth in profits and dividends. Growth in profits and dividends is what investors ultimately want, but for Penguin, has yet to materialise.". That is just factually untrue. The company's profit has increased from a net loss of $(6.4)m in 2016 to a net profit of $13.6m in 2018 and TTM profit of $16.3m currently, increasing every single year. Dividends has gone from 0 from FY2016 to 0.45 cents from FY2017 and then to 1.25 cents from FY2018. Simply put, that statement is untrue. Much as you would like forum readers to not misunderstand your position, I would like for you to be careful in your selection of statements as well. hopefully no offense here.

As for me, I am sleeping soundly with Penguin in my portfolio even though the percentage that it takes up has nearly doubled. I believe in order to have extraordinary returns, we have to be patient and let the position run. I do believe Penguin is at the start of the profit inflexion point. Time will ultimately tell, and hopefully time holding onto this company's shares will reward shareholders.