Please refer to the important disclosures at the back of this document. Well established... Kingsmen Creatives (Kingsmen) is a communications design and production group. Its business can be segregated into four segments: (i) Exhibitions & Museums, (ii) Interiors, (iii) Research & Design, and (iv) Integrated Marketing Communications. The group has been engaged in several high profile projects which bear testimony to its superior industry positioning. These include designing and building part of the Universal Studios Singapore theme park, providing exhibition services for the Shanghai World Expo 2010, as well as being the Official Events Management Services Sponsor for the Singapore 2010 Youth Olympic Games. … and poised for further growth. Since its listing in Sep 2003, net profit has grown at a compound annual growth rate (CAGR) of 46%, while revenue has chalked up a 29% CAGR. The group is well positioned for further growth and targets to double its sales in the next five years. We believe that the target is achievable in view of (i) the increase in Meetings, Incentives, Conventions & Exhibitions (MICE) events along with the opening of Singapore's Integrated Resorts (IRs), (ii) growth of the international theme park and casino industry, and (iii) the increase in demand for retail interior fit-outs. Earnings visibility amid global macroeconomic uncertainty. Kingsmen delivered a 30.8% YoY growth in 1Q10 sales to S$46.7m and has an outstanding order book amounting to S$133m. Of this amount, it expects to recognise S$119m in FY10 and anticipates further growth in its order book, buoyed by the influx of MICE events at Singapore's Marina Bay Integrated Resort, as well as strong demand for interior fit-outs for shops and boutiques in Singapore and abroad. The group's strong order book boosts earnings visibility, giving it an advantage amid the current investment climate where global macroeconomic headwinds appear to be clouding earnings visibility across various industries. Good dividends; attractive valuations. Initiate with BUY. Kingsmen's stock has not been spared from broad market weakness despite its low exposure to Europe. At current levels, it is trading at just 6.8x FY10F PER, close to its historical trough of 4.3x PER. Coupled with a generous dividend yield of 5.9%, valuations appear attractive. We initiate coverage on Kingsmen with a BUY rating and S$0.84 fair value estimate, based on 9x blended FY10/11F PER, in line with its historical average. Key catalysts include contract wins and an increase in demand for retail interior fit-out projects along with the economic recovery and improved tourism landscape. Kingsmen Creatives Ltd SINGAPORE Company Update Results MITA No. 010/06/2009 29 June 2010 Initiating Coverage BUY Current Price: S$0.59 Fair Value: S$0.84 SINGAPORE Company Report MITA No. 013/06/2010 Reuters Code KMEN.SI ISIN Code 5DQ Bloomberg Code KMEN SP Issued Capital (m) 194 Mkt Cap (S$m / US$m) 115 / 83 Major Shareholders Islanda 19.57% O-Vest 19.57% Free Float (%) 37.0% Daily Vol 3-mth (‘000) 92 52 Wk Range 0.425 - 0.740 Reaping record earnings in good and bad times 1000 1500 2000 2500 3000 3500 4000 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Kingsmen STI Lee Wen Ching (65) 6531 9806 e-mail: [email protected](S$ m) FY08 FY09 FY10F FY11F Revenue 190.6 242.0 245.6 282.8 Gross Profit 58.5 59.5 61.4 70.7 P/NAV (x) 2.6 2.2 1.8 1.5 EPS (cts) 7.5 7.9 8.7 10.0 PER (x) 7.9 7.5 6.8 5.9
18
Embed
SINGAPORE MITA No. 010/06/2009 - Kingsmen Creatives Ltdkingsmen.listedcompany.com/misc/Kingsmen_Creatives... · 29-06-2010 · Kingsmen Creatives (Kingsmen) is a communications design
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Please refer to the important disclosures at the back of this document.
Well established... Kingsmen Creatives (Kingsmen) is acommunications design and production group. Its businesscan be segregated into four segments: (i) Exhibitions &Museums, (ii) Interiors, (iii) Research & Design, and (iv)Integrated Marketing Communications. The group has beenengaged in several high profile projects which bear testimonyto its superior industry positioning. These include designingand building part of the Universal Studios Singapore themepark, providing exhibition services for the Shanghai World Expo2010, as well as being the Official Events ManagementServices Sponsor for the Singapore 2010 Youth OlympicGames.
… and poised for further growth. Since its listing in Sep2003, net profit has grown at a compound annual growth rate(CAGR) of 46%, while revenue has chalked up a 29% CAGR.The group is well positioned for further growth and targets todouble its sales in the next five years. We believe that thetarget is achievable in view of (i) the increase in Meetings,Incentives, Conventions & Exhibitions (MICE) events alongwith the opening of Singapore's Integrated Resorts (IRs), (ii)growth of the international theme park and casino industry,and (iii) the increase in demand for retail interior fit-outs.
Earnings visibility amid global macroeconomicuncertainty. Kingsmen delivered a 30.8% YoY growth in 1Q10sales to S$46.7m and has an outstanding order bookamounting to S$133m. Of this amount, it expects to recogniseS$119m in FY10 and anticipates further growth in its orderbook, buoyed by the influx of MICE events at Singapore'sMarina Bay Integrated Resort, as well as strong demand forinterior fit-outs for shops and boutiques in Singapore andabroad. The group's strong order book boosts earningsvisibility, giving it an advantage amid the current investmentclimate where global macroeconomic headwinds appear tobe clouding earnings visibility across various industries.
Good dividends; attractive valuations. Initiate with BUY.Kingsmen's stock has not been spared from broad marketweakness despite its low exposure to Europe. At current levels,it is trading at just 6.8x FY10F PER, close to its historicaltrough of 4.3x PER. Coupled with a generous dividend yield of5.9%, valuations appear attractive. We initiate coverage onKingsmen with a BUY rating and S$0.84 fair value estimate,based on 9x blended FY10/11F PER, in line with its historicalaverage. Key catalysts include contract wins and an increasein demand for retail interior fit-out projects along with theeconomic recovery and improved tourism landscape.
Kingsmen Creatives Ltd
SINGAPORE Company Update Results MITA No. 010/06/2009
Cash at beginning of year 21.1 27.9 20.3 33.3 Dividend yield (%) 5.1 5.9 5.9 5.9
Cash at end of year 27.9 20.3 33.3 44.3 ROE (%) 33.2 28.7 26.7 25.5
Cash and cash equivalents 28.2 22.8 35.8 46.8 Net gearing (%) Net Cash Net Cash Net Cash Net Cash
Source: Company data, OIR estimates
Page 18 29 June 2010
Kingsmen Creatives Ltd
For OCBC Investment Research Pte Ltd
Carmen LeeHead of ResearchPublished by OCBC Investment Research Pte Ltd
SHAREHOLDING DECLARATION:The analyst/analysts who wrote this report holds NIL shares in the above security.
RATINGS AND RECOMMENDATIONS:OCBC Investment Research’s (OIR) technical comments and recommendations are short-term and tradingoriented.- However, OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-monthinvestment horizon. OIR’s Buy = More than 10% upside from the current price; Hold = Trade within +/-10%from the current price; Sell = More than 10% downside from the current price.- For companies with less than S$150m market capitalization, OIR’s Buy = More than 30% upside from thecurrent price; Hold = Trade within +/- 30% from the current price; Sell = More than 30% downside from thecurrent price.
DISCLAIMER FOR RESEARCH REPORTThis report is solely for information and general circulation only and may not be published, circulated,reproduced or distributed in whole or in part to any other person without our written consent. This reportshould not be construed as an offer or solicitation for the subscription, purchase or sale of the securitiesmentioned herein. Whilst we have taken all reasonable care to ensure that the information contained in thispublication is not untrue or misleading at the time of publication, we cannot guarantee its accuracy orcompleteness, and you should not act on it without first independently verifying its contents. Any opinion orestimate contained in this report is subject to change without notice. We have not given any considerationto and we have not made any investigation of the investment objectives, financial situation or particularneeds of the recipient or any class of persons, and accordingly, no warranty whatsoever is given and noliability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the recipientor any class of persons acting on such information or opinion or estimate. You may wish to seek advicefrom a financial adviser regarding the suitability of the securities mentioned herein, taking into considerationyour investment objectives, financial situation or particular needs, before making a commitment to invest inthe securities. OCBC Investment Research Pte Ltd, OCBC Securities Pte Ltd and their respective connectedand associated corporations together with their respective directors and officers may have or take positionsin the securities mentioned in this report and may also perform or seek to perform broking and otherinvestment or securities related services for the corporations whose securities are mentioned in this reportas well as other parties generally.
Privileged/Confidential information may be contained in this message. If you are not the addressee indicatedin this message (or responsible for delivery of this message to such person), you may not copy or deliverthis message to anyone. Opinions, conclusions and other information in this message that do not relate tothe official business of my company shall not be understood as neither given nor endorsed by it.