The New Standard in Wealth Management, Wealth Management Alliance

Wealth Management Alliance

The New Standard in Wealth Management

WMA is a Singapore-based multi-family office with a Capital Markets Services license and provide fund management and investment advisory services to a small number of global UHNW clients. We also act as incubator for single-family offices, allowing them to plug into our broader ecosystem and infrastructure, and tap on our investment professionals for advice. WMA is designed around providing truly bespoke advice to each client, rather than taking a one-size-fits-all approach that may not fit each client's investment objectives and risk tolerances. On top of that, we are designed so that we avoid any semblance of conflicts of interests by being compensated only by the client (which may include profit sharing), as opposed to the model that many of our peers adopt, which include compensation from a variety of third parties such as funds managers, distributors or banks. That, to us, is the easiest way to be firmly on the side of the client in every decision we make.

Thematic (Sector/Industry)

<ul><li>Singapore’s non-oil domestic exports (NODX) unexpectedly fell 3.5% y/y in May, the worst in seven months.</li><li>The contraction was led by a slump in exports to the US (-20.6% y/y), suggesting that the front-loading ahead of US tariffs has faded.</li><li>Meanwhile, manufacturing PMI has slipped into the contractionary zone since April, last seen nearly two years ago.</li></ul>

Singapore’s non-oil domestic exports (NODX) unexpectedly fell 3.5% y/y in May, the worst in seven months.The contraction was led by a slump in exports to the US (-20.6% y/y), suggesting that the front-loading ahead of US tariffs has faded.Meanwhile, manufacturing PMI has slipped into the contractionary zone since April, last seen nearly two years ago.

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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      <img src='https://api2.sgx.com/sites/default/files/2021-03/Capture_6.PNG' alt='MPM-CEO' />
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    <div class='content-caption'>MPM-CEO</div>
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<p>It was during some of the darkest days in his entrepreneurial journey that Sean Lee learnt what it takes to forge ahead, despite overwhelming odds.</p>

<p>The Chief Executive Officer of SGX-listed Marco Polo Marine Ltd struggled for many months to keep his marine logistics company afloat, amidst a protracted downturn in the oil and gas industry that began with plunging crude prices in mid-2015.</p>

<p>“Those days were the toughest I had ever encountered,” Lee recalled. “Everything crumbled when oil prices collapsed. Most of my peers in the industry went belly-up because funding from the banks evaporated. If we had also thrown in the towel, all our stakeholders, employees, and subcontractors would have suffered, so we chose the hardest route, which is to try and save the company instead.”</p>

<p>Lee spent nearly a year looking for investors and liquidity sources to shore up Marco Polo. In November 2017, he found nine new investors who pooled together S$60 million in rescue financing for the Group. Apricot Capital, Yanlord, Penguin International, Soilbuild, Goldbell, and Oxley were some of the companies named in association with the equity injection deal.</p>

<p>“When we were searching for investors, I visited 150 people, and was rejected 141 times. The process of knocking on every single door - one after another - wasn’t an easy one,” he admitted.</p>

<p>At the end of the day, it was all about staying the course. “As cliched as it may sound, I really learnt what perseverance, stamina and commitment means,” he added. “It all boils down to a ‘never say die’ attitude.”</p>

<p>Four years on, following a massive debt restructuring and refinancing exercise, Marco Polo has cleaned up its balance sheet, and swung from a net debt to a net cash position. As at 30 September 2020, net debt to equity was a negative 14%, while cash and cash equivalents stood at S$13.6 million.</p>

<p>“That period was quite a rollercoaster ride, and now, the Group is finally out of the woods,” Lee said.</p>

<p>“Today, while oil and gas remains our bread and butter, we’re actively expanding our business ventures, and focused on transitioning into the renewable energy sector. This is a fledgling industry with huge opportunities, as countries and organisations increasingly turn to green energy sources. This augurs well for our growth prospects.”</p>

<p><strong>Post-Restructuring Pivot</strong></p>

<p>Listed on the then SGX Sesdaq in 2007 and migrated to the Mainboard in 2009, Marco Polo Marine principally engages in shipping and shipyard operations. Its shipping business revolves around the chartering of Offshore Supply Vessels (OSVs), which comprise Anchor Handling Tug Supply (AHTS) vessels for deployment in regional waters, as well as chartering of tugboats and barges by customers engaged in the mining, commodities, construction, infrastructure and land reclamation industries.</p>

<p>The shipyard operations focus on shipbuilding as well as ship maintenance, repair, outfitting and conversion services, carried out in its shipyard in Batam, Indonesia. Occupying a total land area of about 34 hectares with a seafront of approximately 650 meters, the shipyard also houses three dry docks, boosting the Group’s technical capabilities and service offerings to undertake projects involving mid-sized and sophisticated vessels.</p>

<p>Tapping on this core expertise, Marco Polo is pivoting to the renewables sector, providing customised solutions in the chartering, development, fabrication, and construction of bespoke renewable energy assets for its customers.</p>

<p>In particular, the Group is actively pursuing contracts for the construction of offshore wind farm vessels in the region. Although the specifications are different from those used in oil and gas exploration projects, vessels can be deployed to support certain parts of the wind farm installation and construction, without additional capital expenditure.</p>

<p>“Offshore wind farms are low-hanging fruit in the region - there is a lot of potential for the construction and installation of such projects in Taiwan and many opportunities in countries like South Korea, Japan and Vietnam,” Lee said.</p>

<p>Analysts point out that the offshore wind as well as oil and gas industries share technologies and elements of their supply chains. The International Energy Agency (IEA) estimates that 40% of the full-lifetime costs of an offshore wind project, including construction, has significant synergies with the offshore oil and gas sector.</p>

<p>“The burgeoning offshore wind energy industry in Asia is in its nascent stage, where structures are still installed in shallow waters with depths of up to 50-60 metres. This presents a tremendous area of opportunity for Marco Polo Marine, whose fleet specialises in those depths,” UOB-Kay Hian said in a company report published in August last year.</p>

<p>“Of particular interest is the Taiwan offshore wind market, one of the fastest growing in the world - the government targets to produce 15.5 gigawatts of electricity through offshore wind by 2035, making it the most sought-after destination for the world’s top offshore wind developers as they seek a foothold in Asia,” it added.</p>

<p><strong>Green Economy Focus</strong></p>

<p>Meanwhile, Marco Polo continues to grapple with a number of challenges, not the least of which is weaker oil demand due to the global downturn following COVID-19. Oil prices fell dramatically in the early stages of the pandemic, and have only partially recovered to pre-crisis levels.</p>

<p>For its ship chartering business, the Group will step up marketing efforts and explore additional revenue sources by going beyond Southeast Asia, although the success of such efforts ultimately depends on containment of the pandemic. Utilisation of its tugboats and barges is expected to improve as construction activity in Singapore progressively resumes. As for the shipyard division, it will focus on securing ship repair and maintenance orders from regional ship owners.</p>

<p>One saving grace is that the COVID-19 has brought sustainability and clean energy sources into even greater focus, Lee noted.</p>

<p>“Investors have shied away from traditional coal projects and a lot of liquidity has poured into renewables - this has picked up during the pandemic,” he added. “The move towards a sustainable and green economy is developing faster than anticipated, and we want to ensure that we are part of that shift.”</p>

<p>Understandably, there’s much to keep the 44-year-old up late into the night. “I am a worrier, an over-thinker,” Lee admitted with a laugh. “I constantly worry about the ever-changing business environment, and I’m always turning over in mind all the “what ifs”.”</p>

<p>“But I have learnt to take it much easier now. If turning around the company didn’t floor me then, there’s very little that would kill me now. We just have to face each problem, and solve it one step at a time. I always remind myself that no matter how tough the situation may appear to be, with perseverance and hard work, we can still get through it,” he added.</p>

<p>Lee has two daughters and a son, aged six to 20. The values that he wants to impart to his children include honesty and sheer grit.</p>

<p>“Integrity is one of the key reasons our investors were willing to put their money with Marco Polo Marine - when they invested, they invested in me and my team,” Lee said.</p>

<p>“Likewise, without determination, we would not be here today. I always tell my kids, never be scared of what is ahead, just do it, and when you need to make a decision, just make it. If it doesn’t work out, keep at it, work at it, until it does - these should be your life’s values.”<br><br><br><strong>Marco Polo Marine Ltd</strong></p>

<p>Listed on SGX Mainboard since 2007, Marco Polo Marine is an integrated marine logistics company, which has expanded to become a reputable player in the region. The Group’s ship chartering business provides Offshore Supply Vessels (OSVs) as well as tugboats and barges, which are deployed in regional waters for its customers in the offshore oil and gas, mining, commodities, construction and infrastructure sectors. The Group’s shipyard business undertakes shipbuilding and maintenance as well as repair, outfitting and conversion services in Batam, Indonesia.</p>

<p>The company website is: <a href="http://www.marcopolomarine.com.sg"><strong>www.marcopolomarine.com.sg</strong></a><br><br>
Click <a href="https://www.sgx.com/securities/equities/5LY"><strong>here</strong> </a>for the company's StockFacts page.<br><br>
For the year ended 30 September 2020 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/QQYC4T8CH6OZ2TJB/640673_MPML-%20FY2020%20Results%20Announcement.pdf"><strong>here</strong></a>.<br><br>
 </p>

<p><strong>About kopi-C: the Company brew</strong></p>

<p><strong>Text: Jennifer Tan-Stanisic</strong><br><strong>Photo: Company file</strong><br><br><em>kopi-C </em>is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.<br><br>
For previous editions of <em>kopi-C: the Company brew,</em> please click <a href="https://www.sgx.com/research-education/market-dialogues">here</a>.  <br><br>
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="https://www.sgx.com/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.</p>
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    MPM-CEO


It was during some of the darkest days in his entrepreneurial journey that Sean Lee learnt what it takes to forge ahead, despite overwhelming odds.

The Chief Executive Officer of SGX-listed Marco Polo Marine Ltd struggled for many months to keep his marine logistics company afloat, amidst a protracted downturn in the oil and gas industry that began with plunging crude prices in mid-2015.

“Those days were the toughest I had ever encountered,” Lee recalled. “Everything crumbled when oil prices collapsed. Most of my peers in the industry went belly-up because funding from the banks evaporated. If we had also thrown in the towel, all our stakeholders, employees, and subcontractors would have suffered, so we chose the hardest route, which is to try and save the company instead.”

Lee spent nearly a year looking for investors and liquidity sources to shore up Marco Polo. In November 2017, he found nine new investors who pooled together S$60 million in rescue financing for the Group. Apricot Capital, Yanlord, Penguin International, Soilbuild, Goldbell, and Oxley were some of the companies named in association with the equity injection deal.

“When we were searching for investors, I visited 150 people, and was rejected 141 times. The process of knocking on every single door - one after another - wasn’t an easy one,” he admitted.

At the end of the day, it was all about staying the course. “As cliched as it may sound, I really learnt what perseverance, stamina and commitment means,” he added. “It all boils down to a ‘never say die’ attitude.”

Four years on, following a massive debt restructuring and refinancing exercise, Marco Polo has cleaned up its balance sheet, and swung from a net debt to a net cash position. As at 30 September 2020, net debt to equity was a negative 14%, while cash and cash equivalents stood at S$13.6 million.

“That period was quite a rollercoaster ride, and now, the Group is finally out of the woods,” Lee said.

“Today, while oil and gas remains our bread and butter, we’re actively expanding our business ventures, and focused on transitioning into the renewable energy sector. This is a fledgling industry with huge opportunities, as countries and organisations increasingly turn to green energy sources. This augurs well for our growth prospects.”

Post-Restructuring Pivot

Listed on the then SGX Sesdaq in 2007 and migrated to the Mainboard in 2009, Marco Polo Marine principally engages in shipping and shipyard operations. Its shipping business revolves around the chartering of Offshore Supply Vessels (OSVs), which comprise Anchor Handling Tug Supply (AHTS) vessels for deployment in regional waters, as well as chartering of tugboats and barges by customers engaged in the mining, commodities, construction, infrastructure and land reclamation industries.

The shipyard operations focus on shipbuilding as well as ship maintenance, repair, outfitting and conversion services, carried out in its shipyard in Batam, Indonesia. Occupying a total land area of about 34 hectares with a seafront of approximately 650 meters, the shipyard also houses three dry docks, boosting the Group’s technical capabilities and service offerings to undertake projects involving mid-sized and sophisticated vessels.

Tapping on this core expertise, Marco Polo is pivoting to the renewables sector, providing customised solutions in the chartering, development, fabrication, and construction of bespoke renewable energy assets for its customers.

In particular, the Group is actively pursuing contracts for the construction of offshore wind farm vessels in the region. Although the specifications are different from those used in oil and gas exploration projects, vessels can be deployed to support certain parts of the wind farm installation and construction, without additional capital expenditure.

“Offshore wind farms are low-hanging fruit in the region - there is a lot of potential for the construction and installation of such projects in Taiwan and many opportunities in countries like South Korea, Japan and Vietnam,” Lee said.

Analysts point out that the offshore wind as well as oil and gas industries share technologies and elements of their supply chains. The International Energy Agency (IEA) estimates that 40% of the full-lifetime costs of an offshore wind project, including construction, has significant synergies with the offshore oil and gas sector.

“The burgeoning offshore wind energy industry in Asia is in its nascent stage, where structures are still installed in shallow waters with depths of up to 50-60 metres. This presents a tremendous area of opportunity for Marco Polo Marine, whose fleet specialises in those depths,” UOB-Kay Hian said in a company report published in August last year.

“Of particular interest is the Taiwan offshore wind market, one of the fastest growing in the world - the government targets to produce 15.5 gigawatts of electricity through offshore wind by 2035, making it the most sought-after destination for the world’s top offshore wind developers as they seek a foothold in Asia,” it added.

Green Economy Focus

Meanwhile, Marco Polo continues to grapple with a number of challenges, not the least of which is weaker oil demand due to the global downturn following COVID-19. Oil prices fell dramatically in the early stages of the pandemic, and have only partially recovered to pre-crisis levels.

For its ship chartering business, the Group will step up marketing efforts and explore additional revenue sources by going beyond Southeast Asia, although the success of such efforts ultimately depends on containment of the pandemic. Utilisation of its tugboats and barges is expected to improve as construction activity in Singapore progressively resumes. As for the shipyard division, it will focus on securing ship repair and maintenance orders from regional ship owners.

One saving grace is that the COVID-19 has brought sustainability and clean energy sources into even greater focus, Lee noted.

“Investors have shied away from traditional coal projects and a lot of liquidity has poured into renewables - this has picked up during the pandemic,” he added. “The move towards a sustainable and green economy is developing faster than anticipated, and we want to ensure that we are part of that shift.”

Understandably, there’s much to keep the 44-year-old up late into the night. “I am a worrier, an over-thinker,” Lee admitted with a laugh. “I constantly worry about the ever-changing business environment, and I’m always turning over in mind all the “what ifs”.”

“But I have learnt to take it much easier now. If turning around the company didn’t floor me then, there’s very little that would kill me now. We just have to face each problem, and solve it one step at a time. I always remind myself that no matter how tough the situation may appear to be, with perseverance and hard work, we can still get through it,” he added.

Lee has two daughters and a son, aged six to 20. The values that he wants to impart to his children include honesty and sheer grit.

“Integrity is one of the key reasons our investors were willing to put their money with Marco Polo Marine - when they invested, they invested in me and my team,” Lee said.

“Likewise, without determination, we would not be here today. I always tell my kids, never be scared of what is ahead, just do it, and when you need to make a decision, just make it. If it doesn’t work out, keep at it, work at it, until it does - these should be your life’s values.”   Marco Polo Marine Ltd

Listed on SGX Mainboard since 2007, Marco Polo Marine is an integrated marine logistics company, which has expanded to become a reputable player in the region. The Group’s ship chartering business provides Offshore Supply Vessels (OSVs) as well as tugboats and barges, which are deployed in regional waters for its customers in the offshore oil and gas, mining, commodities, construction and infrastructure sectors. The Group’s shipyard business undertakes shipbuilding and maintenance as well as repair, outfitting and conversion services in Batam, Indonesia.

The company website is: www.marcopolomarine.com.sg  
Click here for the company's StockFacts page.  
For the year ended 30 September 2020 financial results, click here.  
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Marco Polo Marine Turns Tide, Steers into New Chapter

<div><em><strong>These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
<p></p>
<p>COMPANY RESULTS</p>
<div>
<h2>Penguin International (PBS SP)</h2>
<div>
<p><strong>1H20: Double Whammy From COVID-19 Epidemic And Depressed Oil Prices</strong></p>
<div>
<div>
<div>
<p><strong>Penguin reported weak results on the back of strong headwinds. 1H20 revenue and net </strong><strong>profit formed 38.7% and 30.1% of our respective full-year forecasts. Both shipbuilding </strong><strong>and chartering segments suffered drops in revenue due to depressed oil prices along </strong><strong>with weak market sentiment caused by the ongoing COVID-19 pandemic. We cut our </strong><strong>2020 EPS by 34.5% and our PE-based target price by 30% to S$0.42. Downgrade to </strong><strong>HOLD as we expect revenue growth to stay flat. Entry price: S$0.34.</strong></p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/407/original/image_62347324071599433710840.png?1599433712" class="editor-image img-responsive" data-smartkarma-image-id="157407"></figure>
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<p><strong>RESULTS</strong></p>
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<ul>
<li><strong>Soft results due to industry headwinds.</strong> Penguin reported weak 1H20 results with revenue and net profit at S$50.1m (-26.2%yoy) and S$3.9m (-53.2% yoy) respectively, forming only 38.7% and 30.1% of our full-year estimates. The weak performance was largely contributed by the COVID-19 pandemic and the sharp fall in oil prices, which softened demand for new shipbuilding vessels along with lower chartering and utilisation rates.</li>
<li><strong>Shipbuilding segment underperformed</strong>. 1H20 shipbuilding revenue was at S$39.3m, down 28.8% yoy as demand for new vessels deliveries dropped due to weaker market sentiment. However, Penguin had stated that no customers had sought to terminate any existing shipbuilding contracts with some even delaying vessel deliveries via mutual agreement. Penguin’s Batam shipyard also remained fully operational during Singapore’s lockdown measures, undertaking any third-party shipbuilding projects. Six vessels were delivered, of which three were built for stock and three were built to order (BTO) vessels. Two of the BTO vessels were windfarm vessels, which is a new growing segment that Penguin is diversifying into.</li>
<li><strong>Depressed oil prices weakened chartering demand.</strong> As the majority of Penguin’s chartering clients are oil majors, depressed oil prices had caused Penguin’s charter and utilisation rates to fall, leading to a 15% yoy drop in chartering revenue. Planned additions to the chartering fleet were also delayed due to lockdown measures in Singapore.</li>
</ul>
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These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.

COMPANY RESULTS

Penguin International (PBS SP)

1H20: Double Whammy From COVID-19 Epidemic And Depressed Oil Prices



Penguin reported weak results on the back of strong headwinds. 1H20 revenue and net profit formed 38.7% and 30.1% of our respective full-year forecasts. Both shipbuilding and chartering segments suffered drops in revenue due to depressed oil prices along with weak market sentiment caused by the ongoing COVID-19 pandemic. We cut our 2020 EPS by 34.5% and our PE-based target price by 30% to S$0.42. Downgrade to HOLD as we expect revenue growth to stay flat. Entry price: S$0.34.








RESULTS





Soft results due to industry headwinds. Penguin reported weak 1H20 results with revenue and net profit at S$50.1m (-26.2%yoy) and S$3.9m (-53.2% yoy) respectively, forming only 38.7% and 30.1% of our full-year estimates. The weak performance was largely contributed by the COVID-19 pandemic and the sharp fall in oil prices, which softened demand for new shipbuilding vessels along with lower chartering and utilisation rates.
Shipbuilding segment underperformed. 1H20 shipbuilding revenue was at S$39.3m, down 28.8% yoy as demand for new vessels deliveries dropped due to weaker market sentiment. However, Penguin had stated that no customers had sought to terminate any existing shipbuilding contracts with some even delaying vessel deliveries via mutual agreement. Penguin’s Batam shipyard also remained fully operational during Singapore’s lockdown measures, undertaking any third-party shipbuilding projects. Six vessels were delivered, of which three were built for stock and three were built to order (BTO) vessels. Two of the BTO vessels were windfarm vessels, which is a new growing segment that Penguin is diversifying into.
Depressed oil prices weakened chartering demand. As the majority of Penguin’s chartering clients are oil majors, depressed oil prices had caused Penguin’s charter and utilisation rates to fall, leading to a 15% yoy drop in chartering revenue. Planned additions to the chartering fleet were also delayed due to lockdown measures in Singapore.












Non-SGX Report: Penguin International (PBS SP): 1H20: Double Whammy From COVID-19 Epidemic And Depressed Oil Prices

<p><em><strong>These equity research reports are not written by the SGX.</strong> SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p><div>
<div>
<div>
<div>
<p>COMPANY UPDATE</p>
<div>
<div>
<div>
<div>
<h2>Penguin International (PBS SP)</h2>
<div>
<div>
<div>
<div>
<p><strong>Expect A Slowdown In 2020, But Recovery In 2021</strong></p>
<div>
<div>
<div>
<div>
<p><strong>Penguin held its AGM in May 20, and responded to questions on the impact of COVID- 19 and low oil prices. Both the shipbuilding and chartering segments face headwinds as demand for its Flex Fighters and chartering falls. To preserve cash, Penguin has slowed down fleet expansion and stock vessel construction programmes. We cut our 2020 EPS by 47%, and lower our PE-based target price by 29% to S$0.60. Maintain BUY as we expect EPS recovery of 34% yoy for 2021.</strong></p>
<div>
<div>
<div>
<div>
<p>WHATS NEW</p>
<div>
<div>
<div>
<div>
<p>• <strong>Depressed oil prices have softened demand for both business segments...</strong> With the collapse in oil prices during Mar/Apr 20, both of Penguin’s business operations have been affected as demand for both shipbuilding and chartering have fallen. According to management, Penguin’s charter rates for crewboats and ferries have taken a hit as oil majors start slashing costs in a bid to stay profitable. In response to this crisis, Penguin’s management has slowed down its charter fleet expansion and stock vessel construction programme to preserve cash.</p>
<p>• <strong>...as well as its biggest key market, Nigeria.</strong> According to management, the oil crisis has affected Penguin’s key market, Nigeria. As oil is Nigeria’s biggest industry, the drop in oil prices has led to a decline in demand for Penguin’s Flex Fighters. This is significant as Nigeria contributes roughly 36-56% of Penguin’s total annual revenue. However, we reckon that Nigeria’s ongoing piracy issues as well as the gradual recovery in oil prices will still help underpin demand for Flex Fighters going forward.</p>
<p>• <strong>Impact of COVID-19 on its business.</strong> Being listed as an essential service, Penguin was able to remain operational during the Circuit Breaker period in Singapore, but only with less than half of its foreign worker capacity. To mitigate the loss in headcount, Penguin’s Singapore, PR and S-Pass staff chipped in to help. Furthermore, Penguin’s Batam shipyard remained fully operational during the same period.</p>
<p>• <strong>Existing customers remain committed for delivery.</strong> Management stated that although the COVID-19 pandemic has softened demand for new vessels, none of its clients have terminated any existing contracts for stock vessels, build-to-order vessels or vessels on charter. More than half of its stock vessels have been sold, with deposits of about 20-30% received.</p>
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</div>
</div>
</div>
</div>
</div>
</div>

These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



COMPANY UPDATE




Penguin International (PBS SP)




Expect A Slowdown In 2020, But Recovery In 2021




Penguin held its AGM in May 20, and responded to questions on the impact of COVID- 19 and low oil prices. Both the shipbuilding and chartering segments face headwinds as demand for its Flex Fighters and chartering falls. To preserve cash, Penguin has slowed down fleet expansion and stock vessel construction programmes. We cut our 2020 EPS by 47%, and lower our PE-based target price by 29% to S$0.60. Maintain BUY as we expect EPS recovery of 34% yoy for 2021.




WHATS NEW




• Depressed oil prices have softened demand for both business segments... With the collapse in oil prices during Mar/Apr 20, both of Penguin’s business operations have been affected as demand for both shipbuilding and chartering have fallen. According to management, Penguin’s charter rates for crewboats and ferries have taken a hit as oil majors start slashing costs in a bid to stay profitable. In response to this crisis, Penguin’s management has slowed down its charter fleet expansion and stock vessel construction programme to preserve cash.
• ...as well as its biggest key market, Nigeria. According to management, the oil crisis has affected Penguin’s key market, Nigeria. As oil is Nigeria’s biggest industry, the drop in oil prices has led to a decline in demand for Penguin’s Flex Fighters. This is significant as Nigeria contributes roughly 36-56% of Penguin’s total annual revenue. However, we reckon that Nigeria’s ongoing piracy issues as well as the gradual recovery in oil prices will still help underpin demand for Flex Fighters going forward.
• Impact of COVID-19 on its business. Being listed as an essential service, Penguin was able to remain operational during the Circuit Breaker period in Singapore, but only with less than half of its foreign worker capacity. To mitigate the loss in headcount, Penguin’s Singapore, PR and S-Pass staff chipped in to help. Furthermore, Penguin’s Batam shipyard remained fully operational during the same period.
• Existing customers remain committed for delivery. Management stated that although the COVID-19 pandemic has softened demand for new vessels, none of its clients have terminated any existing contracts for stock vessels, build-to-order vessels or vessels on charter. More than half of its stock vessels have been sold, with deposits of about 20-30% received.

























Non-SGX Report: Penguin International (PBS SP): Expect A Slowdown In 2020, But Recovery In 2021

<p><i><b>These equity research reports are not written by the SGX.</b> SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</i></p><div>
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<p>COMPANY RESULTS</p>
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<h2>Penguin International (PBS SP)</h2>
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<p><strong>4Q19: Excellent Results To Round Off 2019, Weakness In Share Price Unfounded</strong></p>
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<p><strong>Penguin capped off 2019 with strong 4Q19 results that were in line with our expectations. 2019 revenue and net profit came in at S$136.3m and S$19.4m respectively, forming 92.5% and 100% of our full-year forecasts. Both the shipbuilding and chartering segments contributed strongly in 2019. With resilient demand and a strong orderbook, we reckon the ongoing COVID-19 epidemic has little impact on Penguin. Maintain BUY and PE-based target price of S$0.85.</strong></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/139/original/image_5817153551589330405490.png?1589330407" class="editor-image img-responsive" data-smartkarma-image-id="133139"></figure>
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<li><strong>Spectacular annual growth.</strong> Penguin International’s (Penguin) 4Q19 revenue and net profit were in line with expectations. Strong revenue contribution from both the shipbuilding and chartering segments led to robust growth for 2019 revenue (+27.1% yoy) and 2019 net profit (+42.9% yoy). According to Penguin’s 4Q19 results, this was led by a strong pick-up in demand from new and existing markets for both business segments.</li>
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<li><strong>Excellent delivery numbers and orderbook.</strong> In 2019, shipbuilding revenue grew 31.4% yoy to S$108.4m (S$82.5m). This was largely due to an impressive delivery of 32 new vessels in 2019 vs 15 vessels in 2018. Furthermore, Penguin’s inventory levels have doubled from S$20.6m in 2018 to S$42.0m in 2019. As inventory largely consists of ships under construction, this gives an indication to the expanding orderbook Penguin currently has. We forecast Penguin to deliver around 40 new vessels in 2020.</li>
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<li><strong>Chartering segment becoming a robust revenue driver.</strong> For Penguin’s chartering segment, revenue grew 12.9% to S$27.9m (S$24.7m). This was due to Penguin adding four new crewboats to its operating fleet while charter rates and utilisation rates have risen in line with increased demand from oil companies switching away from helicopters. As oil prices have stayed muted, this bodes well for crewboats over choppers.</li>
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These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



COMPANY RESULTS




Penguin International (PBS SP)




4Q19: Excellent Results To Round Off 2019, Weakness In Share Price Unfounded




Penguin capped off 2019 with strong 4Q19 results that were in line with our expectations. 2019 revenue and net profit came in at S$136.3m and S$19.4m respectively, forming 92.5% and 100% of our full-year forecasts. Both the shipbuilding and chartering segments contributed strongly in 2019. With resilient demand and a strong orderbook, we reckon the ongoing COVID-19 epidemic has little impact on Penguin. Maintain BUY and PE-based target price of S$0.85.






Spectacular annual growth. Penguin International’s (Penguin) 4Q19 revenue and net profit were in line with expectations. Strong revenue contribution from both the shipbuilding and chartering segments led to robust growth for 2019 revenue (+27.1% yoy) and 2019 net profit (+42.9% yoy). According to Penguin’s 4Q19 results, this was led by a strong pick-up in demand from new and existing markets for both business segments.






Excellent delivery numbers and orderbook. In 2019, shipbuilding revenue grew 31.4% yoy to S$108.4m (S$82.5m). This was largely due to an impressive delivery of 32 new vessels in 2019 vs 15 vessels in 2018. Furthermore, Penguin’s inventory levels have doubled from S$20.6m in 2018 to S$42.0m in 2019. As inventory largely consists of ships under construction, this gives an indication to the expanding orderbook Penguin currently has. We forecast Penguin to deliver around 40 new vessels in 2020.






Chartering segment becoming a robust revenue driver. For Penguin’s chartering segment, revenue grew 12.9% to S$27.9m (S$24.7m). This was due to Penguin adding four new crewboats to its operating fleet while charter rates and utilisation rates have risen in line with increased demand from oil companies switching away from helicopters. As oil prices have stayed muted, this bodes well for crewboats over choppers.






























Non-SGX Report: Company Results: 4Q19: Excellent Results To Round Off 2019, Weakness In Share Price Unfounded

Singapore

Penguin International Limited operates as an integrated marine and offshore services company. The Company specializes in design, construction, and operation of high-speed aluminum ships. Penguin International owns and operates a fleet of vessels as well as aluminum shipbuilding yards. Penguin International serves customers worldwide.

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Penguin International (PBS SP)

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Non-SGX Report: Penguin International (PBS SP): Expect A Slowdown In 2020, But Recovery In 2021

These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please...

Singapore Exchange Ltd (SGX)

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