Kingsmen Creatives

[Musicwhiz]

Good potential for Kingsmen to continue their working relationship with H&M and Uniqlo, as they will be opening new outlets in Jem in 2013. Please see news article.

The Straits Times
Mar 27, 2012
New mall in Jurong on track to open next year

By Amanda Tan

Singaporeans living in the west can expect a new shopping mall in Jurong to be ready in the second quarter of 2013.

The 818,000 sq ft mall, called Jem, will house popular brands such as Swedish clothing giant H&M and Japanese casual-wear label Uniqlo. This is in addition to household names like Robinsons, FairPrice Xtra and Courts.

At a media conference on Tuesday, Australian developers Lend Lease announced that it has already leased out 80 per cent of its retail area.

Mr Paul Walker, Jem's project development director, said that people in the west are still under-supplied in terms of retail space per person, dismissing talk that there are too many shopping malls sprouting in the area, including the new JCube.

[valuenewb]

Slowly but surely, Kingsmen is creeping up.

Yesterday Kingsmen hit a high of 66 cents despite the general market exhibiting some weakness. What's good is that it's a high yield stock and management has been delivering on their promises so far.

China expansion/plans seems to have hit some turbulence but that's not unexpected.

Vested

[Musicwhiz]

Using the last done share price of 65 cents, and assuming a consistent dividend payout of 4 cents/share, the current yield is about 6.2%.

I look forward to receiving Kingsmen's Annual Report and attending the upcoming AGM in late April 2012.

[Musicwhiz]

I just visited the new Uniqlo store in Parkway Parade today, and it was crowded with many shoppers eager to buy Uniqlo's clothing as they were giving opening day discounts! The store was done up very beautifully by Kingsmen.

Also, I took the chance to visit Kingsmen's booth yesterday at Invest Fair 2012, and spent some time speaking with Andrew Cheng, the Group's General Manager. He also gave a short talk about "Experiencing Kingsmen" - basically an introduction to what the Group does along with many photos of the jobs they did for international clients. Please do check out a post done by FFN on his blog which details some of the salient points:-

http://financiallyfreenow.wordpress.com/...fair-2012/

To add on to what he has mentioned in his post:-

1) Export Fixtures business continues to remain strong. Sales was $11m for 2010 and $23m for 2011, and is posied to continue to grow steadily. Kingsmen has two staff deployed in Canada and USA to do business development for export fixtures, and Europe and Japan clients also engage Kingsmen. The pieces are all fabricated in their Johor factory and Kingsmen has a cost advantage over European clients.

2) Roll-out management continues to be a key feature of Kingsmen's business model, but some clients do not use Kingsmen for all their territories, preferring instead fo choose local contractors in some instances.

3) Kingsmen continues to aggressively go after new clients, as well as working hard to retain existing ones which are expanding regionally. Singapore is seen as a good test bed for launching their flagship Asian expansion stores, and if they can make money in Singapore, they will usually roll out shops in other parts of SEA.

4) Integrated Marketing Communications (IMC) is a growing division but is very niche, therefore it helps to supplement Kingsmen's business but will never grow to be a significant revenue generator. Still, the division is cash-flow positive.

5) Margins will continue to hover between 6% to 8%, but top line is hard to grow as Kingsmen has too many projects to bid for and insufficient staff to manage all these projects. Staff recruitment and retention are problems, but it is good that the Company intends to build their foundations slowly snd steadily.

6) With the development of more theme parks in SEA through 2012 to 2015, there can only be more opportunities for Kingsmen to pitch for projects.

7) Kingsmen is in negotiations for the second H&M store to be opened soon in Jem mall, the new mall in Jurong East.

8) Gardens By The Bay contract was $10m while the recent USS contract was $18m. There are also other opportunities to garner contracts as more attractions are coming up, and mall refurbishments are always ongoing not only in Singapore but also in Malaysia and other countries.

9) Kingsmen only owns their premises in Seoul and Malaysia. The rest of their offices and factories are rented, therefore this keeps them asset-light.

10) For some of their contracts, they differentiate between design and fabrication as some clients only desire design while getting other contractors to do the job. Kingsmen obviously earns higher margins from design work compared with fabrication, but their focus is on holistic client satisfaction and therefore will work with the client on all aspects of the job.

11) There are events such as Air Shows in which the organizers are the same, therefore Kingsmen will follow them globally and assist them to set up whichever part of the world they are in - this is as good as recurring income as there will always be air shows all around the world, just to give an example.

Andrew has confirmed that the FY 2011 AR should be out by this week (probably Thursday), and the AGM will be held at Kingsmen's premises on April 26, 2012 (Thursday) at 11 a.m.

[violinist]

Thank you.

[Musicwhiz]

Note: Updated previous post (#457) with attachment for Notice of AGM FY 2011.

[dydx]

Kingsmen's FY11 AR makes interesting reading.....
http://info.sgx.com/listprosp.nsf/6c6be9...e00117f7c/$FILE/KingsmenAR11_Final.pdf

It is really heartening to witness Kingsmen's continuous growth year after year!

I now look forward to the coming $0.025/share Final dividend payable 25May12, with 'XD' date fixed for 8May12.

[shanrui_91]

Good result coupled with good management brings good dividends, but I have 3 questions to ask:

1) Why is there such a significant jump in profit from 2008 onwards? is it due to the USS? though the effect should not have prolonged over the years

2)while revenue from interior rises by 20+%, segmental profit remain the same though this is supposed to be a more profitable division. It seemed like the main reason is due to COGS and not staff or other expenses. What is the cause behind this rising COGS that is resulting in erosion of profit margin for interior segment? Is it because more of the works are done by subcontractor?

3)It's research and design that save the day for kingsmen, with a pretty nice margin. Are they actively growing this segment at the moment?

[freedom]

for Q1, I think it was higher revenue. Kingsmen realizes economy of scale, so the profit leaps

[Musicwhiz]

Good result coupled with good management brings good dividends, but I have 3 questions to ask:

1) Why is there such a significant jump in profit from 2008 onwards? is it due to the USS? though the effect should not have prolonged over the years

2)while revenue from interior rises by 20+%, segmental profit remain the same though this is supposed to be a more profitable division. It seemed like the main reason is due to COGS and not staff or other expenses. What is the cause behind this rising COGS that is resulting in erosion of profit margin for interior segment? Is it because more of the works are done by subcontractor?

3)It's research and design that save the day for kingsmen, with a pretty nice margin. Are they actively growing this segment at the moment?

Hi, good questions, thanks.

1) The jump in profit was in part due to USS, and Kingsmen also started pitching for more jobs relating to scenic/thematic works from that year onwards. The learning curve was steep for USS and though the contract was large they had to take a haircut in margins; but now that they have the knowledge they can work better on other theme park projects. The reason the effect is prolonged is due to the presence of theme parks in countries like Hong Kong and China which Kingsmen are actively bidding for. In the meantime, the MICE sector has grown noticeably larger and more vibrant since the completion of the IRs (MBS and RWS).

2) I see it more as the Export Fixtures which are eroding margins for Interiors. Normal fitouts in Singapore and the region would have better margins than fixtures export to USA, Europe and Japan. Note that Kingsmen grew exports by more than double to $22m in FY 2011, so there should also be some noticeable margin dip.

3) Research and Design is more of specialized services which occupies a niche segment. I've spoken to Kingsmen and though this division will grow, it will not be the main revenue generator and neither can it scale up so easily. Thus, I would expect revenue contribution to remain small.