Kingsmen FY2010 Analysis

Kingsmen released its FY2010 results on 22nd Feb 2011 and I’m very pleased with the results.

The revenue for 2010 dipped 2.8% mainly due to the completion of the Universal Studios Singapore project in 2009 that was worth about $78 million. However, it has to be said that Kingsmen did a good job to fill the vacuum left by the USS project with the completion of several major projects in FY2010.

The group’s Interiors division was the major contributor of revenue for this FY. It contributed to 49.6% of overall revenue versus the 44.7% contribution by the Exhibitions and Museums division. The Interiors division did well as it completed more than 20 shops in Marina Bay Sands. The Interiors division has always been a star for Kingsmen and I believe it will continue to shine in the years ahead.

The gross profit increased when compared to last year even though the revenue dipped. The gross profit margin improved and is at 27.8%. Net profit margin is at 6.9%.

Looking at the balance sheet, cash in hand stands at $29.9 million with negligible debt. Trade receivables is at $68.9 million and it has been in the high range for the past two FYs. This may be characteristic of winning mega projects but it would be good if Kingsmen could get push to receive cash earlier. This will increase cash flow as well. Retained earnings is at $39.3 million. ROE dipped whereas ROA increased slightly.

Looking at the cash flow statements, capex was at $6.1 million. This was due to acquisition of two new factory units in Malaysia. Average free cash flow is very healthy at $17.4 million.

Kingsmen’s competitor, Cityneon also released its FY2010 results. Its Thematics division’s revenue dipped 69.8% due to completion of USS projects. Comparing this to Kingsmen (drop of 23.5%), the drop was very drastic. Thus, Kingsmen’s performace is quite commendable. I didn’t compare with Pico, a bigger competitor, as their FY ended Oct 31, 2010.

I feel Kingsmen needs to aim for higher GPM of more than 30% and NPM of more than 7% going forward if it wants to become bigger and better. Kingsmen has the lowest GPM amongst its competitors. Cityneo’s GPM is at 31.9% and Pico’s at 28.6%. Cityneon’s GPM is high as I believe it doesn’t undertake that many mega-scale projects that Pico and Kingsmen undertake. Bigger projects affect margins.

Another thing that is commendable is that revenue from China contributed 22.8% vs 18.5% in 2009. US & Canada contributed 7.4% vs 2.2% in 2009.

Order book stands at $84 million as at 21st Feb 2011. The outlook for Kingsmen remains bright after having been awarded several thematic projects for 2011 and several more available for bidding. Kingsmen is also setting up a more automated production facility in Beijing and is expected to be operational by second half of 2011.

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2 thoughts on “Kingsmen FY2010 Analysis

  1. Thanks for the analysis! Will be coming up with my own soon, but in no particular hurry.

    Just sit tight and enjoy the 2.5c dividend. :)

    One note though – how much will they be investing in their China automated facility? And is it as large or larger than their Malaysian one? Any idea?

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