Penguin International Ltd - CGS-CIMB Research 2020-02-25: 4Q19 Solid Growth


Penguin International Ltd - 4Q19 Solid Growth

  • Penguin International (SGX:BTM)'s FY19 core net profit of S$18.4m (+35.3% y-o-y) was in-line at 101%/98% of our/consensus FY19F (S$18.1m/S$18.8m).
  • PBS has a positive outlook for FY20F, for both its shipbuilding and crewboat chartering activities. We lift FY20-21F EPS by 7-7.3%.
  • Reiterate ADD with a higher Target Price, still based on 1x FY20F P/BV.
  • Robust balance sheet and niche vessel sales are its forte.

FY19 revenue grew by 27.1% y-o-y; gross profit jumped 21.2%

  • Penguin International (SGX:BTM)'s FY19 revenue jumped 27.1% on higher chartering (S$27.9m/+13.0% y-o-y) and shipbuilding revenue (S$108.4m/+31.4% y-o-y).
  • Penguin International mentioned that its shipyards in Singapore and Batam delivered 32 new vessels in FY19, of which 59% were built for stock (BTS) and chartering (c.19 vessels) and 41% were built to order (c.13 BTO vessels). Penguin International also enjoyed improved utilisation and charter rates. FY19 gross profit grew by 21.2% y-o-y, and it achieved gross profit margins (GPM) of 30%.

Net income jumped 35.3% y-o-y, DPS of 1.75 Scts announced

  • Despite lower FY19 other income of S$6.1m on lower fleet vessel sales (vs. FY18: S$6.7m), core net profit (ex-tax refund in 4Q19) grew by 35.3% to S$18.4m due to the higher revenue, efficient operating cost management and a lower effective tax rate.
  • Penguin International also announced a final DPS of 1.75 Scts – close to our expected 20% payout ratio.

PBS is still positive, raising FY20-21F EPS

  • Penguin International mentioned that it remains positive on its FY20 prospects. It sees continued demand for its crew transfer vessels for offshore wind, armoured security vessels for maritime protection, crewboats for oil and gas personnel transfers, and passenger ferries for tourism and public transport. It is also continuing its fleet renewal programme and adding new crewboats to its operating fleet as it sees a pick-up in chartering activities.
  • We raise FY20-21F EPS by 6.97%-7.28% on higher shipbuilding revenue, as we believe Penguin International may look to increase BTS sales in FY20F. We also introduce our FY22F forecast which features 4% y-o-y net profit growth.

Reiterate Add, net cash and still growing

Catalysts and risks

  • Potential re-rating catalysts are higher vessel sales and GPM.
  • Downside risks are lower sales and chartering.

Cezzane SEE CGS-CIMB Research | https://www.cgs-cimb.com 2020-02-25
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