Kingsmen at Invest Fair 2011

I was at Invest Fair 2011 held at Suntec Singapore International Convention & Exhibition Centre yesterday morning to listen to Andrew Cheng, Kingsmen Group General Manager. His talk was entitled “Experiencing Kingsmen”. I will cover the key aspects covered during the talk and if you would like to hear the whole talk, you can download the recorded audio from the link provided towards the end of the post.

Key highlights

• Currently fitting out the H&M flagship store at Orchard Building, formerly occupied by California Fitness. It is the first store in South East Asia.
• 1HFY2011 was released few days back and the interiors business provided 56.1% of overall business vs 44.6% in 1HFY2010. The exhibitions business was at 36.4% vs 50.8% in 1HFY2010. Andrew said going forward, Kingsmen will focus more on the interiors business.
• Future growth drivers: MICE, thematic business (discussed in detail later), retail and interiors (expansion of brands around the region, new brands, new malls), fixtures export (interest from Japan, US)
• Thematic business work in progress:

1. Universal Studios Singapore Phase 2 & 3 and maintenance
2. Gardens by the Bay (around $10m worth of projects)
3. Hong Kong Disneyland expansion
4. Fushun Dreamworld (China)
5. Ocean Kingdom (Zhuhai, Guangdong, China)
6. Imagic (Brazil)

• Thematic projects pitching for:

1. River Safari (Singapore)
2. Legoland (Malaysia)
3. Kidzania (KL, Malaysia)
4. Madam Thaos Happy Land (Vietnam)
5. Disney Shanghai
6. Monkey Kingdom (Beijing)
7. Universal Studios Japan
8. Samsung Everland (South Korea)
9. Universal Studios Korea
10. Oman Museum – pitching for 7 projects
11. Legoland Dubai
12. Universal Studios Dubai

Two people among the audience asked questions. The first question was what are the challenges Kingsmen faces. For that, Andrew mentioned the challenges are multifold. If a crisis were to happen, the exhibition division will be affected just like during the financial crisis. However, the retail business actually picked up during that period since the retailers planned for refurbishment 3-4 years in advance. Another challenge is that of human capital.

The second question was if Kingsmen is planning to do a share buyback (the person must probably be an investor). Andrew said that the company is actually planning to do a buyback but at an appropriate time. I also emailed him regarding this on 11th August after seeing the share price drop to $0.50 and also because it has been sometime since Kingsmen last did a share buyback (last was in Oct 2008). His reply was, “We are constantly looking for opportunities to enhance shareholder value and also reward shareholders and staff”. Doing a share buyback will bode well for investors especially when the current price is grossly undervalued.

After the talk, I quizzed Andrew further on certain aspects of the business privately. He said alternative marketing is picking up and clients want to do more to reach out to their customers. A testament of this was the Heineken Boutique Bar done by Kingsmen in Orchard Road. You can take a look at Page 13 of Kingsmen Watch 2010 to see the actual photo of the bar done by Kingsmen. It was inspired by the “Walk-in Fridge” commercial seen on TV. You can view the advert below:

As mentioned above, Kingsmen will be focusing more on interiors going forward but they are also pitching for more theme parks business. I was concerned on how will they be balancing these two and whether they will exhaust their resources. For that, Andrew said that the interiors business and theme parks business, like their other businesses, have their own profit and loss statements and their own team of expertise. So, it won’t compromise each others’ business at all. Before pitching for the various theme park projects, they have to consider the time they need to handover the project to their client to prevent overworking their designers. At present stage, their designers are quite stretched.

Andrew concluded with the statement that Kingsmen cannot assure share price appreciation but it can assure a good dividend yield and a stable business.

For a copy of the audio recording, you can download it from here. For Invest Fair 2010’s Kingsmen presentation, you can download it from here.

I also took some photos of the booth. The first two pictures show the front of the booth and the last picture shows the left side at the back of the booth.

You can download the latest Kingsmen Watch 2011 – retail and office interiors division from here and the Kingsmen Watch 2011 – exhibitions, events and museum division from here. If you want the hardcopy, you can head down to the Kingsmen booth today to grab copies of it. If you are going down, don’t forget to sit on the comfortable white leather Barcelona chair!