Kingsmen Creatives

[iam802]

PROPOSED TRANSFER TO THE MAIN BOARD OF THE SGX-ST - PLACEMENT OF 4,000,000 NEW ORDINARY SHARES

http://info.sgx.com/webcorannc.nsf/ef3b ... enDocument

[la papillion]

I promised Cheng I'll do a valuation of Kingsmen, so that he can compare with his method of using FCF as a basis for the numerical intrinsic value. I did not undertake a check on the figures he passed on the the spreadsheet, so all the figures are taken from it.

http://3.bp.blogspot.com/_2fzAeUjgk18/S ... npaint.bmp


A few things to point out:

1. I do not know the business of Kingsmen Creatives as intimately as him, as such, I'm approaching it with the curiosity of a quant. I'm just interested to see how the figures tally. Since I'm did not do a comprehensive research on Kingsmen, the figures I put into my calculation might be a case of GIGO - garbage in garbage out. DO NOT use the figures as an anchor for the intrinsic value, without doing more extensive research yourself.

2. All my calculations are based on the following assumptions:

a. I assume that the diluted EPS for FY08 is 7 cts. While 1H08 EPS is 2.85 cts, it possible to reach this full year EPS of 7 cts because Cheng mentioned that the second half is the stronger half of the financial year.

b. I assume that the EPS will grow at various rate, namely 10%, 15% and 20%. The CAGR of EPS is 45% from 2003 to 2007. The most recent EPS growth (from 2006 to 2007) is 61.3%. I do not expect Kingsmen to keep growing at the phenomenal rate of anyway near 40% or 60%, hence I’m more comfortable to use an EPS growth of at most 15%. When unsure, it’s best to not to be too optimistic.

c. My investment horizon is 10 years, hence I will discount the earnings up to 10 years. I assume that the company will fold over then, hence it will have no terminal or perpetuity value. This serves as an underestimate of the worth, as a great bulk of the intrinsic value comes from the terminal value (assuming that the company continues growing in perpetuity).

d. Interest rate is taken as 4%. I prefer using a range from 4% to 8% with the lower limit as the long term (10yrs) SGD Treasury bond rate and the 8% as the long term index market return. The figures are just ball park estimate, so any more accurate values will not add any more certainty to the inherent uncertainty of the calculation. So, why so serious?



Here's what I get:

http://2.bp.blogspot.com/_3qF-4FCPF1I/S ... 132313.gif


I'm comfortable with the intrinsic value from 0.80 to 1.00. That's the target for 10 yrs. Current price is now at 0.435. Thus, the CAGR returns will be between 6.3% to 8.7%. If we take the maximum value of 1.39 (20% EPS growth rate, 4% discount rate), the CAGR returns will be 12.3%.

How about we do it the reverse way? I want to get 15% per annum over 10 years, so what price will I have to buy in now so as the get that kind of returns? Assuming an intrinsic value from 0.80 to 1.39, we'll need to buy in from 0.20 to 0.34.

PE based on FY07 earnings is now at 5.53 x. Historical lowest PE is around 4.9, so maybe we can expect to see it drop to 0.385 (representing 4.9x FY07 earnings) before it's safer?

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Humpty Dumpty sat on the wall
Humpty Dumpty had a great fall
All the king's horses and all the king's men
Had scrambled eggs for weeks and for weeks

[millionairemind]

Published November 11, 2008

Kingsmen bags $59.5m Universal contracts
Sentosa jobs take order book to over $270m, keeping firm busy through 2010
By VEN SREENIVASAN

IN its single-biggest deal so far, fast-growing communications design, exhibitions and interior fit-out group Kingsmen Creatives has clinched two contracts worth $59.5 million for works at Universal Studios Singapore on Sentosa.

The first project is a $17 million deal to design and fit out food and beverage and retail and merchandising outlets at Universal Studios. The second is a $42.5 million contract to design and build the themed facade, and provide area development works for part of Universal Studios.

Both contracts are from Resorts World at Sentosa's main contractor, China Jingye Engineering Corporation (Singapore Branch).

Kingsmen said that the jobs would be completed by October 2009 and would 'contribute positively and materially to the earnings per share or net tangible assets per share of the group and its subsidiary companies for the financial year ending Dec 31, 2009'.

Kingsmen executive chairman Benedict Soh said: 'We are delighted to clinch these contracts. They reaffirm our strong position and capabilities in the industry and the prospects for our business. Despite the challenging economic times, we have strong forward contracts for the next 12 months from a broad base of clients from a wide range of industries. We are going to be very busy through 2010 - and are confident of landing more projects along the way.'

Kingsmen, which was promoted to the main board of the Singapore Exchange this year, has emerged as one of Asia's leading communications design and production groups, specialising in upmarket interior fit-outs, events and high-end exhibition pavilions. It's top-name clients include leading global fashion-brands Burberry, Gap, Tiffany and carmakers BMW Asia and Hyundai.

The Universal Studios contracts will boost Kingsmen's order book to more than $270 million. At least $173 million of contracts won previously will be completed by the end of the current year, which suggests that the company's revenue for 2008 could be more than double last year's $146 million, which yielded a profit of $9.4 million.

For the first half of this year, Kingsmen reported a profit of $5.4 million on revenue of $77.7 million. It also had about $25 million in cash and cash equivalents.

The latest deals comes after a $14.5 million contract to fabricate and construct show sets and props for the Waterworld Attraction at Universal Studios. Kingsmen also clinched a five-year $25 million deal for seating and guest paddocks at the annual Singapore Formula One motor race.

[kanglc]

MM, are you in this?

[millionairemind]

MM, are you in this?

No, not yet... but then I am not the buy and hold forever investor..

[helios]

this Co. was featured in MoneyMind now ...

Benedict Soh said they've the capabilities to provide services such as the big contracts such as F1 and Universal Studio ... he said they're looking at similar theme projects in the regions ...

[Cheng]

I've sold 2/3 of shares and pocket the profits.

The remaining 1/3 is free money, I just let it ride.

[millionairemind]

Published June 30, 2009

Kingsmen enjoying business sweet spot

By VEN SREENIVASAN

IN AN environment where credit is hard to come by and markets are under siege, there are few companies which can claim to be still enjoying a business sweet spot. Communications design group Kingsmen Creative appears to be an exception. This mainboard-listed company which specialises in design and fitouts for high-end boutiques, theme parks, exhibitions, conventions and museums, continues to power ahead, recording impressive sequential earnings growth.

Its earnings for FY2008 jumped 51 per cent to a record $14.2 million, from $9.37 million the previous year. Kingsmen is already on record assuring investors that FY2009 would be another record year.

Driven by strong contribution from its Greater China subsidiaries, which it acquired in September 2007, the company's topline revenue grew 31 per cent to $190.55 million at end-December 2008, from $145.91 million a year earlier.

Kingsmen also had almost $28 million cash in the bank coming into this year. It currently sits on new orders of some $170 million, some 40 per cent more than a year ago.

But even as this commentary is being written, the company's orderbook is steadily getting thicker amid a steady flow of new projects, both in Singapore and overseas.

The company - which provides regular updates on its orderbook - has already clinched dozens of high-end interior fitout projects at the new Orchard belt malls like the ION, Somerset 313 and Orchard Central. These jobs could potentially boost its orderbook by more than $30 million by the year-end.

And away from the prime shopping belt, it is poised to take on numerous projects at the huge retail malls at the two integrated resorts. It also has numerous jobs at various other upgraded malls.

Its exhibitions unit is already busy with $80 million worth of projects at Universal Studios to design, build and install the theme park's various facades. With the pipeline of projects still flowing, this could surpass $100 million by year-end.

Meanwhile, Kingsmen is into its second year of its $25 million five-year Formula One contract for hospitality suites and seating. Next year will be another busy one with its numerous contracts for the 2010 Youth Olympics.

But that is just Singapore.

Kingsmen's ex-Singapore business has been growing even faster than its domestic income, and currently already accounts for 60 per cent of revenue.

In Greater China, where it enjoys net margins of almost 10 per cent (compared to 8 per cent in Singapore), Kingsmen continues to execute the aggressive retail store rollouts for leading brands like Apple Computers, Burberry's, Ralph Lauren, Hyundai and others. The region already accounts for a quarter of Kingsmen's revenue, but given its high growth and fatter margins, should soon overtake Singapore, which currently accounts for about 40 per cent.

One of its single biggest projects in China could be the World Expo 2010 in Shanghai in May 2010. This is a six-month biennial expo where virtually every country (including Singapore) and every major global brand will be present. And exhibitors spend tens of millions of dollars to build and fit out their pavilions. It doesn't take a genius to figure out that Kingsmen - which has a good foothold in Shanghai and Beijing - is already pitching for projects.

In fact, Kingsmen's key exhibitions, conventions & museums division has seen revenue surge of some 80 per cent over the past year, thanks to events like the Singapore Airshow, Singapore F1, airshows in Dubai and South Korea, the opening of Venetian Macau, Tax-Free Asia Pacific, and various motor shows across Asia. And order flow visibility remains strong, despite the economic slowdown.

New projects include the regional rollout of Universal Studios theme parks in Dubai, Beijing and South Korea and the Shanghai Disneyland. Each project is worth about US$1 billion, with players like Kingsmen typically clinching about 5-10 per cent of contract value.

With a repeat customer rate of over 70 per cent, a presence in over two dozen countries, gross margin widening to 30 per cent and net margin at over 8 per cent, it is perhaps not surprising that some analysts have dubbed Kingsmen the 'recession-proof' business.

Indeed, this is a company which appears to be enjoying a prolonged business sweet spot.

[LenaHuat]

Marc Faber favours this ticker. I'm sure it's pitching for the Shanghai Expo but maybe only for the S'pore pavilion.

[Cheng]

Institutions accumulating? I'm not sure. Would like to enjoy more of this ride before I get down the horse.