Kingsmen Creatives

[RBM]

My mistake - today Kingsmen's share price indeed reached a 52 week intra-day high rather than an all time intra-day high. Apologies.

Kingsmen's share price hit a record intra-day high this morning, with more than 230,000 shares traded at the S$ 0.690 level. It will be interesting to see what happens this coming week, when Kingsmen goes ex-Dividend (SCents 2.5 per share) ........... we all know the theory ........... but lets see.

From the price/volume chart, I can see Mr Market has been working steadily on Kingsmen since the 2nd-week of Feb12. This to me is a reliable-enough sign indicating that a major positive corporate action could be in the making. Wishful thinking?

Hi RBM and dydx,

Kingsmen will go XD on May 8, 2012 (Tue) and release their 1Q 2012 results on May 10, 2012. The way I perceive it is that people just want a piece of that dividend and are hence bidding up the share price. I do not foresee any major corporate action coming soon as a result of recent share price movements.

There were 137 lots transacted at a price of $0.69 in the morning, which contributed to the above-average traded volume. Currently, Kingsmen is trading at $0.695. This equates to a historical dividend yield of 5.75% based on a full-year dividend of 4 cents/share. For info, Kingsmen's all-time high was 70 cents (close) back some time on August 21, 2009. Intra-day high was 74 cents.

[honeyclover]

Kingsmen's share price hit a record intra-day high this morning, with more than 230,000 shares traded at the S$ 0.690 level. It will be interesting to see what happens this coming week, when Kingsmen goes ex-Dividend (SCents 2.5 per share) ........... we all know the theory ........... but lets see.

From the price/volume chart, I can see Mr Market has been working steadily on Kingsmen since the 2nd-week of Feb12. This to me is a reliable-enough sign indicating that a major positive corporate action could be in the making. Wishful thinking?

Hi RBM and dydx,

Kingsmen will go XD on May 8, 2012 (Tue) and release their 1Q 2012 results on May 10, 2012. The way I perceive it is that people just want a piece of that dividend and are hence bidding up the share price. I do not foresee any major corporate action coming soon as a result of recent share price movements.

There were 137 lots transacted at a price of $0.69 in the morning, which contributed to the above-average traded volume. Currently, Kingsmen is trading at $0.695. This equates to a historical dividend yield of 5.75% based on a full-year dividend of 4 cents/share. For info, Kingsmen's all-time high was 70 cents (close) back some time on August 21, 2009. Intra-day high was 74 cents.

Notice Type Notice of Book Closure Date for Dividend
Corporate Action Details (e.g. Rights ratio, dividend ratio, tax rate, etc)
Record Date 10/05/2012
Record Time 17:00
Date Paid/Payable (if applicable) 25/05/2012
Dividend Value Payment Type Dividend Type Financial Year End Dividend Number Tax Exemption Clause
SGD 0.025 Per 1 Ordinary share Tax Exempted (1-tier) Final 31/12/2011 NA This dividend which is paid under the one-tier system is tax-exempt.


Thought it said Record date is 10/05/2012 17:00
isn't this the XD date?

[Musicwhiz]

No the record date is typically T+3 days after XD date. For more info check out SGXNet Corporate Actions tab.

[weiliamhoo]

Hi,

May i ask who are their main competitors that i can compare with?

[Musicwhiz]

Hi,

May i ask who are their main competitors that i can compare with?

Pico Far East, Cityneon, Redwood Group and Design Studio; for different aspects of their business.

[weiliamhoo]

Thanks

[dydx]

It is really nice to see in the latest 1Q results that Kingsmen continues to make steady progress in its regional business foot-print.....
http://info.sgx.com/webcoranncatth.nsf/V...A00337023/$file/KingsmenSGXAnnouncementQ112Final.pdf?openelement

[Salty]

Is 1Q usually a low quarter?
I see the net profit albeit 50% increase is only about 2million.

[Musicwhiz]

To answer your immediate question about 1Q, yes it is seasonally the slowest quarter for Kingsmen as most of the events, interiors and exhibitions occur near the end of the year (towards the Christmas season). However, I think we can analyze the results in context by comparing it with previous 1Q and draw some meaningful conclusions about the direction the business is moving.

First off, let’s take a look at revenues. Revenue for 1Q 2012 came to $46.9m, up 30% from a year ago; and the increase in revenue was almost wholly attributable to the increase in revenues for Museums and Exhibitions (M&E), rather than Interiors which was flat year on year. But looking at this number in isolation is misleading; let’s compare it across three financial periods:-

1Q 2012 - $46.9m (+30% yoy)
1Q 2011 - $36.1m (-22% yoy)
1Q 2010 - $46.7m (+31% yoy)

From the above, one can see that 1Q 2012 revenues were more similar to 1Q 2010’s revenue, being almost on par. However, do note that 1Q 2010 had revenue recognized from Shanghai Expo, which was a major event. For 1Q 2012, there was no such major event mentioned, yet revenues managed to hit the levels of 1Q 2010. This does demonstrate underlying growth in Kingsmen’s M&E division.

M&E Division
1Q 2012 - $22m (+73.7% yoy)
1Q 2011 - $12.7m (-53.6% yoy)
1Q 2010 - $27.4m (+34.3% yoy)

Interiors Division
1Q 2012 - $20.4m (+0.6% yoy)
1Q 2011 - $20.3m (+18.7% yoy)
1Q 2010 - $17.4m (+28.1% yoy)

From the above analysis of Interiors Division, it does seem rather disappointing that growth is flat for 1Q 2012 against a year ago. This division has grown steadily from $13.5m in 1Q 2009 to the current $20.4m, and it remains to be seen if Kingsmen can capture more business through roll-out management programs and by extending their international clientele base. Note that Export Fixtures, which is the fast-growing sub-segment of this division, saw total revenues of about $23m for FY 2011, more than double that of FY 2011 ($11m). Arguably, 1Q 2012 may be a blip, and as the year goes by we should witness if this division can still grow further. According to what I’ve asked at the AGM, Kingsmen are still aggressive in their business development efforts in countries like China and Korea; and are also pitching for more work in Malaysian malls and for refurbishment of clients’ Interiors here in Singapore.

I was personally surprised (but pleased) that R&D and Alternative Marketing managed to grow revenue quite decently, even though a breakdown of profit was not given. Gross margin suffered slightly (a drop to 27.2%) as a result of M&E taking up the bulk of revenues and this division has a lower gross margin compared to Interiors. Disappointingly as well, net margin for Kingsmen also did not hit the 6% to 8% level seen in the full-year results. The net margins for the last 4 years for 1Q are as follows (using net profit attributable to S/H):-

1Q 2012 – 4.42%
1Q 2011 – 3.83%
1Q 2010 – 4.91%
1Q 2009 – 6.58%

It would seem that the 1Q is also seasonally weaker now in terms of net margins, and it will be interesting to query Management on the reason for this.

There is nothing really much to comment on the Balance Sheet, except for the Cash balance which has grown quite remarkably and has surprised me on the upside. Let’s delve a little more into the Cash Flow Statements of past years to try to foretell what the future may bring, and also to assess the cash flow generation consistency of the business.

Cash At Bank Balance (as at end March 31) and borrowings (in square brackets)

2012 - $43.6m [$5m]; Net $38.6m
2011 - $30.8m [$4.9m]; Net $25.9m
2010 - $28.1m [$4.9m]; Net $23.2m
2009 - $29.6m [$3.5m]; Net $26.1m

In short, bank balances are at their highest level in four years, which is not entirely surprising as Kingsmen generates a lot of free cash flow and requires very little by way of working capital or capex (plus they do not hold inventory). Taking a look at the FCF generated in 1Q over the years:-

Free-Cash-Flows (FCF)
1Q 2012 - $10.9m
1Q 2011 - $1.4m
1Q 2010 - $1.6m
1Q 2009 – ($2.5m)

Of the last four years, only 1Q 2009 saw a –ve FCF for 1Q, but 1Q 2012 saw the highest FCF amount, which is probably the reason why the Company declared a 2.5c final dividend which amounted to about $4.85m. This will be reflected in 2Q 2012 results as a payment of dividends under Cash Flow for Financing Activities.

Now comes the tricky part – trying to project the interim dividend which Kingsmen will pay out come August when it releases its 1H 2012 financials. Note that Kingsmen has been paying a very consistent and unchanged 1.5c/share dividend for the last 4 financial years (FY 2008 through to FY 2011). So far only the final dividend has changed (1.5c in 2008, 2c in 2009, 2c in 2010 + 0.5c special in 2010, 2.5c in 2011). To make my analysis more interesting (and hopefully more robust), let’s look at the Cash and Bank balances and FCF for 1H across the last four financial years where Kingsmen has paid 1.5c/share interim dividend:-

Bank Balance/[FCF]
1H 2011 - $28.0m [$3.1m]
1H 2010 - $32m [$8.9m]
1H 2009 - $21.4m [-$4.3m]
1H 2008 - $20m [$6.4m]

Two things can be inferred from the above. First of all, the cash balances as at June 30 for all four years were all LOWER than the current cash balance on Kingsmen’s book as at 1Q 2012. So if we safely assume that Kingsmen will continue to generate FCF in 2Q 2012 which is greater than the amount of dividend paid, this would further boost their cash balance. The second point is that FCF for 1H for all four financial years was less than the FCF generated in 1Q 2012 alone. Unless 2Q 2012 shows a drastic drop in the FCF levels (or this is negative), this would mean that FCF would have hit a 5-year high.

Hence, my conclusion that it is highly likely, though by no means certain, that Kingsmen would have the ability to pay an increased interim dividend of perhaps 2c/share come 1H 2012. I am keeping my fingers crossed, but even if they pay a 1.5c interim dividend, I will still be very pleased.

Comments are welcome. Thanks.

[freedom]

the significantly higher cash had something to do with customer deposit/pre-payment(in balance sheet as amount due to customers for contract work-in-progress), not cash from business operations yet.