Kingsmen Creatives

My "problem" with Kingsmen is it has attracted more fund managers, judging from the reports after every announcement. Maybe it's what the mgmt wants, but when BBs are in, ...

(14-08-2012, 11:22 AM)violinist Wrote: My "problem" with Kingsmen is it has attracted more fund managers, judging from the reports after every announcement. Maybe it's what the mgmt wants, but when BBs are in, ...

I concur with dydx regarding Kingsmen's growth prospects, though there are several macro events such as the Euro Crisis which may derail growth and throw a spanner in the works.

The presence of more funds (and retail investors) means that it would be difficult to purchase this Company cheaply anymore, if we look at the fact that it traded in the 54c to 57c range for about 18 months. On the other hand, as long as you feel that you are paying for growth at a reasonable price, it should not present a problem. Just ensure you have sufficient margin of safety.

(14-08-2012, 10:25 AM)dydx Wrote: A relevant question: Who bought up most of the shares transacted yesterday? (Note: Let me declare here that I was not in the market most of yesterday, and I have not bought or sold a single Kingsmen share since Mar11.)

I bought some yesterday

Kingsmen has, rather surprisingly, closed at an all-time high today of 72.5c. A quick check showed that the previous all-time high close was achieved on Aug 20, 2009 at 72c/share. Note that today's share price has accounted for 2 full-year dividends of 4c/share each since Aug 20, 2009, which means the theoretical share price if compared against the previous high is actually 80.5c/share.

Assuming the business continues to do well, it is not inconceivable that Kingsmen's market cap can continue to grow*.

*Of course, this will make this all the harder to purchase!

Shareholders and investors can use below link to review the latest analyst reports on Kingsmen.....
http://kingsmen.listedcompany.com/research_reports.html

In its latest update report dated 13Aug12, Maybank Kim Eng has re-affirmed their previous 'BUY' call on Kingsmen as well as TP pegged at $0.85. Of course, if Ben Soh and Simon Ong together manage to cut a deal for their combined majority controlling stakes in Kingsmen, it will have to include a price at quite a lot higher than $0.85/share, I guess.

(14-08-2012, 06:04 PM)dydx Wrote: In its latest update report dated 13Aug12, Maybank Kim Eng has re-affirmed their previous 'BUY' call on Kingsmen as well as TP pegged at $0.85. Of course, if Ben Soh and Simon Ong together manage to cut a deal for their combined majority controlling stakes in Kingsmen, it will have to include a price at quite a lot higher than $0.85/share, I guess.

KE's latest report uses a SOTP valuation method and arrives at a TP of $0.85. They did not mention of state the assumptions underlying their numbers, but the implication is that Kingsmen should trade at a FY 2012 9.4x PER. Considering that the much larger and more established Pico FE listed in HKSE trades at around 8-8.5x PER, I think this is rather unrealistic.

Unless Kingsmen can achieve an EPS of 9.3c to 9.5c for FY 2012 and declares a much higher total dividend of 4.5c/share, up from 4c last year, I do not think the current price represents good value.

Following the update report by Maybank Kim Eng (dated 13Aug12), yesterday (15Aug12) DMG & Partners and AmFraser also followed up by issuing their own update reports on Kingsmen.....
http://kingsmen.listedcompany.com/research_reports.html
DMG & Partner has kept a 'BUY' call on Kingsmen and even raised their TP to $0.83 (from $0.76 previously); and AmFraser also has kept their 'BUY' call on Kingsmen and also raised their FV estimate to $0.86 (from $0.78 previously).

Today (16Aug12), Kingsmen advanced further and closed up by another $0.03, at $0.75 - another new high! - with a relatively high total volume of 353 lots transacted at between $0.72 to $0.755, of which some 48% of the total volume transacted at $0.75 and above.

I am happy to note that more people have taken notice of Kingsmen as a high-quality company, and Mr Market is now working quite hard to reward the counter its justified market valuation. Let's hope that those who have bought into Kingsmen recently have done so with at least a medium-term investment perspective!

DMG has just come up with their latest report on Kingsmen. Some of the highlights include:-

1) The high end June-2012 cash balance of 23.4c/share was due to a significant amount of progress billings and net collections received during 2Q 2012.

2) Singapore remains a top MICE destination and despite the global economic slowdown, Singapore has lined up several MICE events over the next couple of years which should be captured by Kingsmen's M&E Division.

3) New malls are still being set up, and retailers have to refurbish their existing outlets; so Kingsmen's Interiors Division would benefit from these activities. Kingsmen's roll-out Management program can also follow these clients as they expand their presence in SEA.

4) As Europe and USA are slowing down, retailers there are facing an economic slowdown and therefore would turn to Asia for more cost-effective solutions. Export Fixtures (captured under Interiors) offers these retailers a more cost-effective solution and Management indicated this division has shown good growth the past year.

5) Kingsmen's track record in the thematic/scenic projects segment would ensure they can capture more contracts in this space, and they would be able to ride on the amusement industry's growth in Asia over the next few years. Kingsmen will be involved in Disney's Shanghai Theme Park, scheduled for 2016.

Kingsmen today closed at an all-time high of 75c/share. At current valuation, and assuming a conservative EPS of 9.3c/share, the Company has a market cap of $143.7m, trades at a forward PER of about 8x and gives a historical dividend yield of 5.3%.

(Vested)

All,

I hope all VB'ers are having a restful Sunday and Hari Raya.

I have tried to stand back from the recent VB postings on this Kingsmen thread, i.e. postings made since the announcement of Kingsmen's rather pleasing 1H 2012 results. I believe it is fair to charachterise the contributors postings as all being either positive or very positive; I include my VB posting of 10th August within such a charachterisation. Although I am vested in Kingsmen and I believe it is a seriously well managed company that "delivers", I wonder if we should ask ourselves if and where there are "gaps in the armour". Please kindly bear with me................

I believe those VB'ers who are vested in Kingsmen (including myself) were pleased with the following features of Kingsmen's 1H 2012 results (amongst other things).............
a) Superior top-line performance across all of Kingsmen's operating divisions.
b) The performance of Kingsmen's Exhibitions and Museums division, which was particularly good - this division generated a ~ 43.5% higher revenue vs. 2Q 2011 (1H 2012 revenue from this division was ~ 55% higher than in 1H 2011).
c) The Interiors division ~ 10% higher revenues quarter-on-quarter and continued business from blue-chip brand names such as Abercrombie and Fitch, Aldo, Burberry, Coach, Fendi, H&M, Hollister, LVMH, Marks and Spencer, Polo Ralph Lauren, Swarovski and Uniqlo.
d) The order book for the remainder of FY 2012.

All sounds very good............ But then I also took a closer look at Pico Far East's 1H 2012 results. I would submit that Pico Far East is probably the best competitor benchmark by which to gauge Kingsmen's relative competitive performance. I believe Pico's 1H 2012 results are best summarised in a crisply written DBS Analyst Report of early July 2012, which I append below.

My take on these Pico results ........... and I deliberately state these provocatively and in a comparative sense........

- Pico's growth rates put Kingsmen into the shade (look at the numbers, e.g. 122% in Museums & Theme Parks!!).
- Pico's gross margin is higher than Kingsmen's (the benefits of scale?).
- Pico now has a ~ 29% higher dividend yield than Kingsmen, based on Friday's closing prices.

To me it looks like the sector which Kingsmen and Pico operate in is a good one to be in right now. But I sense that Pico are carving out a much greater proportion of new Asia Pacific Business than Kingsmen?? And who would be best placed, should a major downturn arrive??

A wise man once told me that the time to consider selling is when the hubris gets universal. I'm not going to sell my Kingsmen shares. But I do wonder if we are (recently) viewing Kingsmen through overly-rose-tinted spectactles? I stress that I am not trying to be difficult or awkward here - I just feel that this highest quality, mature and high objectivity forum may want a discussion around this.

Vested .............in both Pico and Kingsmen.

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DBS Vickers Analyst Report - Pico Far East

>7% dividend yield
• Pico achieved 13% net profit growth to HK$93m in 1H FY12, in line.
• Interim DPS stayed flat at HK$0.04, equivalent to a 52% payout.
• c.HK$1bn of confirmed contract value for 2H FY12 should support its future performance.
• At 23% discount to our TP of HK$2.46 with an attractive yield of >7%, we maintain BUY.

Highlights

Pico registered 30% y-o-y revenue growth to HK$1.8bn in 1H FY12, driven by sound growth across all divisions including museum & theme park (up 122%), conference & show management (up 91%), brand signage (up 35%), and exhibition (up 22%). The company’s exposure into Greater China, which should stand as the growth centre over the medium-term, also continued to gain weight and contributed 60% of group revenue (FY11: 50%).

Gross margin dropped 6.1ppt to 26.2%, amid early booking of expenses for selective museum & theme park projects that will be launched in 2H FY12. 1H FY12 net profit climbed 13% to HK$93m, in line.

Our View

Pico has already confirmed c.HK$1bn contract value for 2H FY12. Specifically, key events like Yeosu World Expo 2012 in Korea and the London Olympics are expected to bring in >HK$160m revenue. We believe Pico’s new factories in Beijing and Shanghai should also commence operations by 1Q13 and 3Q13, respectively, to beef up its project handling capacity & efficiency ahead.

Recommendation

Pico continues to stay appealing judging from its 7.7x 12-month rolling PE (versus its c.10x 5-year average PE) and a decent yield of >7%. The company’s strengthening presence in China should also help to further tap the region’s booming demand for event marketing & brand building. Our new TP of HK$2.46 benchmarks 10x 12-mth rolling PE (previously based on 10x FY12 PE). BUY
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how did u buy pico?