• We initiate on PENGUIN INTERNATIONAL LIMITED (SGX:BTM) with ADD and Target Price of S$0.72 based on 1x FY19F P/BV. We like this stock as it is cheap (4x FY19F P/E ex-cash currently) and profitable.
• Conservative management and diversification into defence vessels helped Penguin International. It suffered one year of net loss in FY16, while some peers went bust.
• Our FY19-21F EPS estimates are conservative (+3.5% CAGR), with potential upside of 15% to FY20F EPS from higher ship sales.

Penguin International Limited Background

• PENGUIN INTERNATIONAL LIMITED (SGX:BTM), a Singapore home-grown designer-builder-owner-operator of aluminium high-speed marine craft, was first incorporated as a private limited company in 1976 and listed on the Singapore Exchange (SGX) Mainboard in 1997.
• Penguin International’s founder, Mr. Heng Kheng Seng, initially set up the company to operate ferries between Singapore and its offshore islands. It continued on primarily as a ferry operator up until FY11, when it disposed of its retail ferry ticketing business (Penguin Ferry Services Pte Ltd). Current executive chairman Mr Jeffrey Hing and managing director Mr James Tham took over the reins of Penguin International in 2009 and 2008, respectively.

Key Business Segments

• Penguin International currently organises its business broadly into two divisions, namely:
  1. shipbuilding, ship repairs and maintenance and
  2. chartering.

Source: CGS-CIMB Research - 24 May 2019