Dear all, Part 5 of my comprehensive analysis of Kingsmen is now up on my blog. Please feel free to visit and leave comments, thanks!
A snippet as follows:-
"Kingsmen is currently trading at a historical FY 2010 PER of 7.2x (EPS of 7.93 cents for FY 2010, last done price at 57 cents/share). Assuming the same valuation was accorded to it as the Cityneon buy-out 3 years ago (at 12.7x), Kingsmen’s fair value should therefore be in the range of $1.007. This would value the entire company at about $190 million (189.381 million issued shares), which still seems cheap compared to its cash generation potential, strong track record and capable Management Team."
Kingsmen also released their latest 1H 2011 results this evening, and declared a 1.5c/share interim dividend (unchanged from last year). Will analyze the results and post here when ready.
Attached please find today's Business Times article on Kingsmen's 1H FY 2011 results. The CEO Benedict Soh is optimistic about a better 2H 2011, as Kingsmen is in the process of bidding for many theme park projects around Asia. With their track record and reputation for quality, it is conceivable that they would be able to win sizeable contracts.
Meanwhile, I am happy with the 1.5c/share interim dividend declared!
While big projects (e.g. the 2010 Shanghai Expo) will give a short-term boost to Kingsmen's business volume/revenue and profits, we have to bear in mind that the real value of this business over time comes from (1) the quality, size and growth of the customer base, (2) the diversity and size of the revenue and income steams, (3) the geographical market reach, (4) the design, project management and other capabilities in the company, (5) the sustainability of Kingsmen's recurrent profitability and cash generation performance, and (6) the quality, competence, leadership, and drive of the senior and middle management team. On all these scores, Kingsmen has done pretty well so far - certainly better than Cityneon!
13-08-2011, 11:01 AM (This post was last modified: 13-08-2011, 11:46 AM by RBM.)
Four points on Kingsmen Creatives, in which I am vested .....
A. Commendations to Musicwhiz for his 5-parter on the Company - the (most recent) 5th part makes for a good and insightfull read. I found the piece on the privatization potential particularly interesting - this could indeed be an additional upside, which I had previously underestimated. And today's Kingsmen leadership is clearly diligent, driven and focused on the value-adding parameters.
B. Kingsmen's 16% revenue reductions in 1H2011 (vs. 1H2010) were anticipated and openly alluded to a-priori by Kingsmen's leadership, citing a reduced level of activity for its Exhibitions division. And on the plus side Kingsmen has demonstrated a pleasing determination to keep costs down - e.g. the salaries component was less than in the same half last year. And it is also pleasing that in the three other divisions (i.e. other than "Exhbitions"), revenues were enhanced half-year-on-half-year.
C. The solidity of Kingsmen's dividend flow remains - the 1.5 cent interrim dividend announced last Thursday being a further proof point. Even without last year's special dividend, Kingsmen yields ~ 6.5% p.a. based on yesterday's closing share price of S$ 0.54. This coupled with clear and non-fanciful growth paths and strong management makes Kingsmen an appealing stock.
D. I must admit to being a tad perplexed by some of Kingsmen's share price moves last Thursday and Friday........
i) I was worried when someone dropped stock at S$ 0.50 (yes .... fifty cents only!) Thursday morning (regrettably I wasn't the one to pick these lots up!!). Worried??...... because it was the morning before the first half financials and interrim dividend announcements. In retrospect probably nothing more than a panic sale, which can happen in volatile markets.
ii) In a ~2% rising SGX market, Kingsmen closed down a tad yesterday and took time to get going in the morning and early afternoon - Mr. Market did not seem overjoyed by the 1H2011 results and interrim dividend announcements. I am puzzled. Why? Because nothing in the first half financials was surprising, the dividend level was re-affirmed and the CEO outlined positive developments for the second half and beyond. What did I miss?
(13-08-2011, 11:01 AM)RBM Wrote: ii) In a ~2% rising SGX market, Kingsmen closed down a tad yesterday and took time to get going in the morning and early afternoon - Mr. Market did not seem overjoyed by the 1H2011 results and interrim dividend announcements. I am puzzled. Why? Because nothing in the first half financials was surprising, the dividend level was re-affirmed and the CEO outlined positive developments for the second half and beyond. What did I miss?
Hi RBM,
I wouldn't worry too much about Kingsmen not moving in tandem with the market. After all, the STI is made up of 30 Component Stocks comprising the larger caps (wiki link for more info).
And those with big money (i.e. Funds, Big boys) usually are mandated to buy these Larger Caps. Those smaller funds buying into small/mid-cap may still be a little more cautious at this stage.
That said, I think it's not necessarily a bad thing! Otherwise, Retail Investors like us would have to swim real hard to have a chance against these guys whose job is to swim in the tides day in and day out. With them sitting out in fear, it gives us some space to decide if there is value and an adequate margin of safety in the the gems we are eyeing.
I am vested in seven other smallish cap Singapore stocks (BBR, BreadTalk, Cheung Woh, Lee Kim Tah, Q&M, Techcomp and Zagro) - Kingsmen was the odd one out yesterday in not moving upwards. Your point is well taken though ............ and Kingsmen shareholders should be pleased that its share price has not retreated anything like most other counters over the last ten days or so, in % terms.
I have to admit I was concerned on Thursday morning!!
(13-08-2011, 11:52 AM)RBM Wrote: ............ and Kingsmen shareholders should be pleased that its share price has not retreated anything like most other counters over the last ten days or so, in % terms.
I have to admit I was concerned on Thursday morning!!
To be honest, I am not pleased. Was anticipating for the panic sell to invest more.
I guess as usual Kingsmen will stand a good chance in winning such projects of high-end retail stores.
according to latest announcement, the two deals are awarded to Kingsmen Creative.
I was at Invest Fair today and heard Andrew's talk and he said H&M will be located at Orchard Building at the former location of California fitness. I will do a post on the talk in my blog. Do watch out for that.
(13-08-2011, 11:52 AM)RBM Wrote: I have to admit I was concerned on Thursday morning!!
On the contrary, I was excited when the price dropped close to 9% that day to $0.50. I didn't buy them that day as I anticipate the price to drop further with the overall market in the coming months.
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