Kingsmen Creatives

Selamat Hari Raya Aidilfitri.

Forgive me valuebuddies.
Thanks to the long weekend.
Finally got a chance to check out Kingsmen latest result.

To my horror, no dividend declared this year?

Stay home and stay safe, everyone.

(25-05-2020, 11:28 AM)Yes, the Kingsmen BOD’s decision not to propose a Final Dividend in respect of FY 2019....... My personal view is this was the “straw that broke the camel’s back“ vis-a-vis the BOD’s proposed award of Performance Shares to Management, which was correctly rejected by shareholders at Kingsmen’s recent AGM. Had the BoD proposed a Final Dividend in line with that of recent years, I believe they would have likely carried the day with their AGM remuneration resolution  ..... to my mind it was callous and highly ill-judged of the BoD To act in the way they did, which again demonstrated that they collectively failed to grasp the importance of aligning the interests of all shareholders (including minority shareholders) and management.Vested, RBM  ¯|_(ツ)_/¯ Wrote: Selamat Hari Raya Aidilfitri.

Forgive me valuebuddies.
Thanks to the long weekend.
Finally got a chance to check out Kingsmen latest result.

To my horror, no dividend declared this year?

Stay home and stay safe, everyone.

Besides the usual macroeconomic challenges faced by most industries, Kingsmen faces two particularly dire pitfalls that so far they have not demonstrated any ability to overcome:

1) Internal - Poor talent management and succession planning. The Board and senior executives are mostly old men who are past or close to retirement age. For a service provider that depends mostly on creativity and IP as its selling proposition, this is a very bad state of affairs. Under normal management best practices, we should be seeing maybe 1/3 oldies guiding 2/3 up and coming talents groomed to eventually take over the business.

2) External - Retail / Brand owners are increasingly moving away from mega opulent marketing activities to bite sized nimble A&P initiatives that emphasize on high frequency, data analytics and integration of online-offline platforms. This is very bad for margins of the traditional business that Kingsmen excels at, they have tried to make some changes along the way but too little too late. Not surprising if the place is led by people in their 60s and 70s.

27 June 2020  repurchased 40 ordinary shares in the share capital of Kingsmen Nikko 
https://links.sgx.com/FileOpen/KingsmenS...eID=621336
The Transaction is not expected to have any material financial impact on the earnings per share and net tangible assets per share of the Group for the current financial year ending 31 December 2020.

Wear mask and keep your distance when going out, valuebuddies.

16 July 2020 Losses for 1H2020 as at 30 Jun 2020 Kingsmen Creatives
https://links.sgx.com/FileOpen/KingsmenP...eID=623956
The Group is expected to report a net loss for 1H 2020 compared to a net profit for the previous corresponding half year ended 30 June 2019.
The global COVID-19 pandemic has severely impacted the business of the Group, resulting in cancellations and postponement of contracts, temporary closure of factories and operations, and a disruption in the supply chain. As a result, the Group registered a decline in revenue and higher cost of sales due to the disruption in supply chain for 1H 2020. Despite the ongoing cost containment and cost saving measures taken, it was not sufficient for the Group to achieve a positive bottom line.

Wear mask and keep your social distance, everyone.

1H Result as at 30 Jun 2020
Rev $122m (vs 172m)
GP  $23m (vs 38m)
Net Lost $6m vs (+1m)
Div NIL vs (1cts)

The COVID-19 pandemic is severely impacting global economic activity. While business activities are gradually resuming, uncertainty remains, especially as the Group sees the resurgence of the virus in major cities around the world. The Group expects the months ahead to be challenging, given the on-going disruption to supply chains, and delays and restrictions in executing existing projects. Clients, while already planning for the future, are cautious in committing new orders, especially in exhibitions and events, and this business area is likely to remain depressed in the near term.

https://links.sgx.com/FileOpen/Kingsmen1...eID=627555

Stay home and stay healthy, valuebuddies.

22cents

the Company has invested an additional sum of SGD 3,000,000 in its wholly-owned subsidiary, Kingsmen Projects Pte Ltd (“Kingsmen Projects”), thereby increasing the issued and paid-up share capital of Kingsmen Projects to SGD 5,000,000. 
The purpose  of the investment is to increase the general working capital of Kingsmen Projects for the operation of its business. 
The principal activities of Kingsmen Projects are the design and production of architectural interiors, decorations and museums. The investment by the Company was funded through its internal resources and is not expected to have any material impact on the earnings per share and  net tangible assets per share of the Group for the current financial year ending 31 December 2020.  
https://links.sgx.com/FileOpen/KingsmenI...eID=629339

Stay home and stay safe, everyone.

Response to SGX Queries:
The impairment loss on contract assets and doubtful trade receivables mainly pertains to final account claims and retention sums on projects which the Group consistently follow up with clients and was made in consideration of the difficulty encountered in the recovery of the balances after taking into account factors such as outcome of negotiations with clients, insolvency or significant financial difficulties of clients and potential default or significant delay in payments by clients. The Board is of the opinion that the methodologies used constantly to determine the value of the impairment loss on contract assets and doubtful trade receivables is reasonable.
https://links.sgx.com/FileOpen/KingsmenR...eID=631336

Stay home and stay safe, everyone.

Kingsmen partners with Crayola to develop unique and highly themed location based experiences

“We are thrilled to partner with Crayola, the global leader in creative expression products, to launch this collaboration, bringing creativity to life and unleashing the power of imagination.” said Mr. Andrew Cheng, Group Chief Executive Officer of Kingsmen.
“It marks another step forward in the expansion of our new content and intellectual property business, building a portfolio of unique, first in the world experiences which has tremendous potential for growth. We will continue to collaborate with global brand and content owners to create and bring a unique mix of fun and engaging immersive environments, interactive installations and multimedia content to the world.”
https://links.sgx.com/FileOpen/KingsmenC...eID=635395


Stay home and stay safe, everyone.

From para 10 result announcement 1H20:

"While the pandemic has had a devastating impact on the experiential attractions business for the moment, the Group sees pent up and good demand for activity and engagement platforms once the pandemic is under control. The Group will press on with its transformation efforts, with an aim to create better experiences and differentiated solutions to ensure that it remains relevant to market needs."

I am starting to sense some positive effects on the efforts to build up the experiential exp business. The old businesses probably will be subdued for a while more. And even if the pandemic has fully passed, it may not be back to previous. So branching into other business like experiential is so important. There has been previous  comparisons between Kingsmen and Cityneon on this aspect. I am not sure if this was explained but it now becomes clear to me that Kingsmen is targeting (or concidence?) more on kids experiential. The brands they had captured so far is reflective of this: Hasbro nerf, living worlds animal planet, toybox, and most recently Crayola. Those with young kids will find most of these names familiar.

Since exiting our circuit breaker, I had been monitoring nerf centre's crowds, base on website indicator. Well, it may not be accurate but at the beginning (july, aug) the indication was that it was always green (not crowded at all). Then sometime after that the indication was removed. So i proceeded to monitor tickets bookings (availability of tickets by date/timeslots). Due to the safe distancing rules, there are restrictions on number of customers allowed at each time slots. Seems like 15 per slot of 30-45min. Over the past 2 weeks I have observed that bookings are getting more brisk. Usually weekend slots are almost fully taken by Thur/Fri. Even weekday slots also doing quite well and the staff are not likely to be swatting flies at anytime. Probably pent up demand and the current restrictions on travel.

It is still early days and the marina sq centre is still the only experimental test bed. No concrete evidence whether the planned centres in other countries are going ahead. The US side is still on, while the China ones had been cancelled.

The the recent Crayola deal seem decent. Crayola as any parent of young kids will know is one of the dominant brands around. However I am not sure what kind of experiential setup will it be.

Perhaps there are more deals in the background going on. Kingsmen should be in a good position to move on. Currently share price has been steady around 20c level. This gives a net cash (cash-debts) around 21c/share. So I am betting on it succeeding in its experiential endeavors. For the old business, I am not expecting much in the short term (1 to 2 years or depend on pandemic/vaccine situation).

Declaration: I had been constantly buying shares.