Wednesday, August 21, 2013

Kingsmen Creatives: Expect a Strong 2HFY13 (OSK)

Kingsmen Creatives: Expect a Strong 2HFY13
(BUY, SGD0.91, TP: SGD1.08)

KMEN’s 2QFY13 PATAMI grew 4.3% y-o-y to SGD5.4m, on the back of a 12.7% increase in revenue. Its orderbook continues to grow as demand for its services remains strong, which would boost 2H13’s performance. Its ability to secure more projects and grow its business is supported by a sturdy balance sheet. Maintain BUY for stable dividends with a TP of SGD1.08, based on 8x FY13 P/E (ex-cash).

Margins slightly lower. Kingsmen Creatives (KMEN)’s 2QFY13 revenue rose 12.7% y-o-y to SGD79.9m, as its interiors division’s business grew. The division’s 33.8% y-o-y growth was partially offset by a 25.7% y-o-y decline in revenue from the exhibitions & museums division, as fewer major exhibitions are held during the odd years. It also recorded a 4.0% y-o-y dip in revenue from its high-margin research & design division. As a result, gross margins were slightly lower.

Potential new jobs back orderbook growth. KMEN’s orderbook stands at SGD294m, of which SGD232m is expected to be recognised in FY13. These projects include works for a few regional theme parks, the five-year F1 Singapore Grand Prix and interior fit-outs for a number of international brands. The regional meetings, incentives, conferencing and exhibition (MICE) industry’s prospects remain healthy as each country seeks to attract new events and tourist numbers. Asia’s thematic & scenic industry also continues to develop. International brands are still expanding in Asia, supported by a growing number of middle-income consumers. Such trends present many new opportunities for KMEN, which has strong capabilities in these areas. Management is currently working on garnering several contracts, which would contribute positively to its orderbook.

Strong balance sheet. KMEN has a net cash balance of SGD54.4m (or SGD0.28 per share). This would support its bid for more projects, while sustaining its dividend payout policy. The company announced a dividend of SGD0.015 per share for 1H13. While revenue growth is likely to moderate going forward, given its tight manpower for project management (note that it has had to turn down some projects), we continue to like the stock for its stable dividends. Maintain BUY.

Source/Extract/Excerpts/来源/转贴/摘录: OSKResearch,
Publish date: 19/08/13

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