Penguin International Ltd - Phillip Securities 2020-06-03: Cash To Ride This Cycle

PENGUIN INTERNATIONAL LIMITED (SGX:BTM) | SGinvestors.io PENGUIN INTERNATIONAL LIMITED (SGX:BTM)

Penguin International Ltd - Cash To Ride This Cycle

  • Penguin International (SGX:BTM) provided some business updates in their recent AGM. The outlook is challenging due to Covid-19 and collapse in oil prices.
  • Charter rate for crew boats will be under pressure, demand for new vessels is down and ferry customers will suffer from the pandemic.
  • We downgrade Penguin International to ACCUMULATE from BUY.
  • Our FY20e earnings is cut by 52%. The target price is dropped to S$0.55 (previously S$0.88). We change our methodology from 5x PE (excluding cash) to a P/BV of 0.7x FY20e (historical 10-year average).
  • The net cash of S$60mn (end-Dec19) will allow Penguin International to ride through this turbulence. Net cash is now 52% of market capitalisation.



Summary From Penguin International's AGM

  • Covid-19 / Oil price impact
    1. Demand for new vessels is down.
    2. Charter rates for crew boats reduced as oil companies slash their cost.
    3. Ferry market is the worst affected by the pandemic
  • Covid-19 Disruption
    1. Shipyard in Singapore is designated essential but only half the foreign workers are allowed to work.
    2. Batam shipyard is operating at full strength.
  • Existing orders
    • No contracts have been terminated. More than half of our stock vessels have been sold, with deposits received.
  • Others
    1. Offshore Wind Farm Support segment is still growing and the company is making progress in this segment.
    2. Demand for Penguin Flex Fighter security vessels in Nigeria in the short term will be affected. However, oil represents a critical industry for Nigeria and piracy in the Gulf of Guinea is still rising.


Downgrade to ACCUMULATE with a lower target price of S$0.55 (previously S$0.88).






Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2020-06-03
SGX Stock Analyst Report ACCUMULATE DOWNGRADE BUY 0.55 DOWN 0.88



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