Kingsmen Creatives

[nitro]

I have seen that Kingsmen have issued their full year 2016 financial results earlier this evening. It will take some time to review and dissect. But as a long term shareholder of the Company, I can already say that given last year's financial performance, I'm deeply disappointed with the Board's proposed Final Dividend - a 25% y-o-y reduction as compared to last years Final Dividend coupled with a paucity of objective commentary to justify the reduction. I'm increasingly concerned that the Board is becoming misaligned with its shareholders - a lack of a well-thought-through Dividend Strategy being a case in point. And is the Damocles Sword of the New Office still colouring the Board's and Management's judgement too much?

The Cheng tenure (as Group CEO) has gotten off to a less-than-satisfactory start IMHO. I really wonder if Andrew and some Board members grasp how important the dividend is to shareholders. I'm losing confidence.

Vested,
RBM

In a glance, i noted (i could be wrong) that treasury shares were used more and more to pay the Management.
Seeing the pathetic margin of retail unit is a very bothering one to me and yet rewarding the Management more and more are decouraging.

Kingsmen used to be able to earn decent ROE by returning substantial earning to shareholders. By returning lesser, the retained earning is likely to earn subpar return. Chasing top line with pathetic margin will be destroying shareholder value than returning most of it.

This company is getting more and more like Clients first, Management second, other stakeholders then after all said and done, throw some bones to shareholders.

There is definitely nothing wrong with clients first and management second, the problem is the barrier for both are LOW.
It is not hard for clients to award to lower price, they may want kingsmen but they want lower price as well.
Same for management (or talented ppl), you reward me more or i can switch boat.

There is hardly a pricing power for kingsmen (even when times were good, their margin was not great).

Hi 

Where in the financial statement does it indicate that treasury shares are being used more and more to pay the management? Thanks

Obviously it is at treasury shares portion.
I am assuming the performance shares scheme mostly go to higher management team. If you have insider info to prove otherwise, i will be pleased to be corrected.

Note:
I am actually throwing out comments because I appreciate the quality service of the company and hence would like it to improve (at least to minority shareholders).

Treasury shares were apparently not enough and hence issued more ordinary shares for such purpose.

If that is to align the shareholders interest with Management team, maybe it is a good reason. But it shows the pricing power of the talented human capital (need to issue performance share to retain them?)
If they are really interested in the company, they can always buy in market? When is the last time we actually see any Management team doing share purchase in market except from company buyback which were apparently for performance share scheme??

<used to be my core holdings>

Seems like Benedict Soh is reading this forum 

He just purchased from market
61lots @ 23 Feb
139lots @ 22 Feb

[corydorus]

Personally i feel one would like to drive it cheap to privatise. Same with Neratel.

[ksir]

I have seen that Kingsmen have issued their full year 2016 financial results earlier this evening. It will take some time to review and dissect. But as a long term shareholder of the Company, I can already say that given last year's financial performance, I'm deeply disappointed with the Board's proposed Final Dividend - a 25% y-o-y reduction as compared to last years Final Dividend coupled with a paucity of objective commentary to justify the reduction. I'm increasingly concerned that the Board is becoming misaligned with its shareholders - a lack of a well-thought-through Dividend Strategy being a case in point. And is the Damocles Sword of the New Office still colouring the Board's and Management's judgement too much?

The Cheng tenure (as Group CEO) has gotten off to a less-than-satisfactory start IMHO. I really wonder if Andrew and some Board members grasp how important the dividend is to shareholders. I'm losing confidence.

Vested,
RBM

In a glance, i noted (i could be wrong) that treasury shares were used more and more to pay the Management.
Seeing the pathetic margin of retail unit is a very bothering one to me and yet rewarding the Management more and more are decouraging.

Kingsmen used to be able to earn decent ROE by returning substantial earning to shareholders. By returning lesser, the retained earning is likely to earn subpar return. Chasing top line with pathetic margin will be destroying shareholder value than returning most of it.

This company is getting more and more like Clients first, Management second, other stakeholders then after all said and done, throw some bones to shareholders.

There is definitely nothing wrong with clients first and management second, the problem is the barrier for both are LOW.
It is not hard for clients to award to lower price, they may want kingsmen but they want lower price as well.
Same for management (or talented ppl), you reward me more or i can switch boat.

There is hardly a pricing power for kingsmen (even when times were good, their margin was not great).

Hi 

Where in the financial statement does it indicate that treasury shares are being used more and more to pay the management? Thanks

Obviously it is at treasury shares portion.
I am assuming the performance shares scheme mostly go to higher management team. If you have insider info to prove otherwise, i will be pleased to be corrected.

Note:
I am actually throwing out comments because I appreciate the quality service of the company and hence would like it to improve (at least to minority shareholders).

Treasury shares were apparently not enough and hence issued more ordinary shares for such purpose.

If that is to align the shareholders interest with Management team, maybe it is a good reason. But it shows the pricing power of the talented human capital (need to issue performance share to retain them?)
If they are really interested in the company, they can always buy in market? When is the last time we actually see any Management team doing share purchase in market except from company buyback which were apparently for performance share scheme??

<used to be my core holdings>

Seems like Benedict Soh is reading this forum 

He just purchased from market
61lots @ 23 Feb
139lots @ 22 Feb

haha, don't really need to purchase from Market if can always reward themselves.
Share awards

We may wonder how the share award can be justified when the performance of the Company is subpar to begin with.
Lower dividend and yet awarding more shares to Management? 
I can see how unhappy some minority shareholders are from the voting result of share awards in AGM.
Yet, it seems to go to deaf ear of Management. 
This again shows how unaligned the minority shareholders are with the majority + active shareholders (Management).

If the Management have confident in the Company, they can always buy from the Market themselves.
Better yet, using the increased dividends !!! But alas, this is NOT the case.

[karlmarx]

I don't think the share award is a cause for concern here. Mainly because the award is small; only 11,430 shares for Ben and Simon, with most of the rest going to the key executives and managers, I believe. After all, these key executives and managers can easily leave and become Kingsmen's competitor. Start-up and fixed costs are low. Working capital is manageable since you can bill your client to pay your contractor. You just need to know clients and contractors, which is knowledge these key people will not lack.

So how else are you going to keep them if you're not going to make them 'partners?' Businesses which also depend heavily on its executives include the medical and legal practice. It is known that managing such highly-skilled individuals is difficult. I mentioned previously that this is one of the key problem (risk from an investor POV) facing Kingsmen, and even more so as it expands and hire more of such highly-skilled-difficult-to-manage individuals. The management solution to this problem is to give them ownership, literally.

However, this is not as big a problem as the trend of a general shift away from retail consumption. Outfitting retail stores make up 50% of its business. So the impact on margins an be big. Last FY, the margins from its retail segment was so tiny it was barely profitable; management claims it was to defend market share. Which could be a good move to wipe out nascent competitors, or at least discourage more from coming into the market. Is Kingsmen going to continue this strategy going into 2017? Probably. We will find out in its Q1 result next Friday. Will e-commerce change demand for retail consumption in the long term? Probably. You may think twice about putting your money here if you think so too.

https://www.bloomberg.com/news/articles/...ecord-pace

https://www.bloomberg.com/news/articles/...n-a-decade

Which is why its other segment, exhibitions, is so important. Because not just about anyone with the skills and contacts can bid for expensive large-scale projects without strong(er) financial backing. Quality will be much more difficult to control as well, leading to cost overruns (a big risk for small businesses) when work need to be redone. This is why Kingsmen has its own manufacturing capability, and it is again something small players will find difficult to afford. Kingsmen's growth will depend on this segment's ability to win more work. Will there be more exhibitions and mega theme parks in SEA in the future?

[sgmystique]

My share of bad investments:
Kingsmen Creatives;
CAO (many years back when it went bankrupt);
Informatics;
Tat Hong;
OKP;
Silverlake Axis (did not exit in time despite over 100% gains, due to greed);
KS Energy (luckily cut loss, so my loss was limited to 60%);
Ouhua;
Lifebrandz;
Hong Fok;
A-Sonic.....

The list goes on....



Sent from my iPad using Tapatalk

Just curious, why do you rate Kingsmen as a bad investment!

I have been a shareholder since 2003 and it has been one of my best picks over the last 15 years...It had traded at around $0.1 at one point after IPO and is currently trading at $0.60 (which would be $0.90 pre-bonus. They had come out with a 1 for 2 bonus a few years back).

They did not do too well in 2016 but management is aware of the slip up in performance and I am confident 2017 will be a far better year!

[vingaard]

My share of bad investments:
Kingsmen Creatives;
CAO (many years back when it went bankrupt);
Informatics;
Tat Hong;
OKP;
Silverlake Axis (did not exit in time despite over 100% gains, due to greed);
KS Energy (luckily cut loss, so my loss was limited to 60%);
Ouhua;
Lifebrandz;
Hong Fok;
A-Sonic.....

The list goes on....



Sent from my iPad using Tapatalk

Just curious, why do you rate Kingsmen as a bad investment!

I have been a shareholder since 2003 and it has been one of my best picks over the last 15 years...It had traded at around $0.1 at one point after IPO and is currently trading at $0.60 (which would be $0.90 pre-bonus. They had come out with a 1 for 2 bonus a few years back).

They did not do too well in 2016 but management is aware of the slip up in performance and I am confident 2017 will be a far better year!

My entry price was from 70-90cts. Based on the business performance and historical cash generation of the business in 2010 to 2015, that entry price seemed reasonable. I had quite a large position at one point but exited completely as I was not confident the performance in the years leading to 2015 can be repeated. I could be wrong but I've made my decision.

Off topic so this will be my last post on Kingsmen in this thread. Moderator please move to the appropriate thread if necessary.


Sent from my iPad using Tapatalk

[corydorus]

From what I see their business has dependency on non-food outlets in Malls, good margins. This has shrunk with Internet online sale proliferation. It will interesting to see where they go from here.

[luckystar]

Kingsmen Creatives will have to reinvent itself, as shopping malls are no longer as thriving as before, as more and more business move retail sales online.

In Singapore, a much larger % of space is becoming foodcourt and restaurants. Will they pay Kingsmen big money to decorate? Not as much as the high fashion boutiques I suppose.

[dydx]

Kingsmen is pursuing a new business idea.....
http://infopub.sgx.com/FileOpen/Kingsmen...eID=465412
The newly created 80%-owned U.S. subsidiary Kingsmen Xperience, Inc. will be engaged in the creation and ownership of media/entertainment
themed licences and the development and marketing of intellectual property for themed attractions and lifestyle parks.

2 relevant questions: (1) How big is this new business' growth potential?, and (2) How big is the profit potential?

[karlmarx]

It will be a few years before we see anything substantial, if at all...