SHARES of mainboard-listed Penguin International soared on Monday, after it issued a holding announcement regarding a possible transaction involving shares of the company.

 

As at 3.43pm, the company&rsquo s shares were trading at 57 Singapore cents, up 14 per cent or seven cents from the previous close. It traded as high as 59.5 cents, or up 19 per cent, earlier in the day.

 

Around 2.2 million shares worth S$1.3 million had changed hands, far higher than the daily average volume of less than 120,000 shares during this quarter.

 

In an exchange filing on Monday morning, Penguin International&rsquo s board of directors said it was notified by executive chairman Jeffrey Hing Yih Peir, and managing director James Tham Tuck Choong that they were in non-binding discussions with a potential investor in relation to a possible transaction involving the shares in the company.

 

" There is no certainty that any specific or definitive agreement will be entered into or that any transaction will materialise from the ongoing discussions," the company said

 

Penguin International, which builds and operates aluminium high-speed craft, added that it will issue a further announcement if and when there are any material developments.

 

" In the meantime, shareholders of the company are advised to exercise caution when dealing in the shares of the company and to refrain from taking any action in respect of their shares in the company which may be prejudicial to their interests." the board said.

 

While the share price has surged on Monday, Penguin International is still down 23 per cent for the year to date, from the 74 cents close on Dec 31, 2019.

 

An investor who bought into Penguin International when it was first listed in October 1997 would have got a negative total return of 13.8 per cent, assuming dividends were reinvested into securities, according to Bloomberg data.

 

According to the company&rsquo s annual report, Mr Hing was the largest shareholder in the company, with deemed interest of 21.3 per cent as at March 25, 2020. Keppel Corporation also had a deemed interest of 6.2 per cent in the firm. 

THE net profit of Penguin International, which builds high-speed aluminium craft, plunged 53.2 per cent to S$3.9 million for the six months ended June, hit by the double whammy of the Covid-19 pandemic and weak oil prices.

 

The mainboard-listed company&rsquo s H1 revenue fell 26.1 per cent to S$50.1 million. Revenue from shipbuilding, ship repair and maintenance was down 28.8 per cent to S$39.2 million, due mainly to fewer stock vessels sold. Income from the chartering segment fell 15 per cent to S$10.9 million, given a decrease in chartering activities. Gross profit correspondingly fell 32.9 per cent to S$12.6 million.

 

The topline shrinkage was softened by a 61.8 per cent rise in other operating income to S$5.8 million, arising from the sale of more vessels from the Penguin&rsquo s operating fleet, as well as S$1.7 million in Covid-19 business-support schemes from the Singapore government.

 

Net operating cash outflows for H1 stood at S$9.4 million, used mainly for shipbuilding. The company had generated net operating cash inflows of S$12.5 million in the same period last year.

 

In H1, Penguin built six new vessels, of which three were for stock and chartering, and the remainder, built to order.

 

But operating conditions remain tough. Penguin noted that demand for new vessels in H1 had weakened, while crewboat charter rates and utilisation rates fell. While none of its clients have terminated any shipbuilding contract, some vessel deliveries have been delayed by mutual agreement.

 

The lockdown of foreign workers&rsquo dormitories in Singapore also affected in-house and subcontracted labour, delaying internal newbuilding projects for its chartering fleet. As at Thursday, all of Penguin&rsquo s in-house foreign workers were back to work, but most of its subcontracted foreign workers were still under lockdown.

 

To conserve cash, Penguin has now halted or slowed down some of its uncommitted build-for-stock vessels. All committed build-for-stock and build-to-order vessels are still being completed as scheduled.

 

Penguin has also obtained and drawn down on a S$5 million unsecured term loan under Enterprise Singapore' s Temporary Bridging Loan Programme.

 

The company said: &ldquo Notwithstanding the challenges, the group is still working hard to secure new build-to-order projects across various market segments, as it expands its geographical reach. The Batam shipyard is currently building various types of vessels for ship owners from South-east Asia, Australia, North Asia, Africa and Europe.&rdquo