Kingsmen at Invest Fair 2011

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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!

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Jim Rogers vs Warren Buffett

The recent US debt problem has split the investor camp into two. One which believes that US will indeed go into a recession and the other camp that believes that US will not go into a recession. One of the camp has Jim Rogers as its patron while the other has Warren Buffett as its member.

Jim Rogers sees no way out of this US debt problem. He said in a CNBC interview yesterday that “it’s physically, humanly impossible for the U.S. to ever pay off its debt” and “they can roll it over and continue to play the charade, but the U.S. is bankrupt.” He also added that investors should “nearly always buy into panic just like you should sell hysteria.” The full article can be found here.

On the other hand, Warren Buffett thinks the US credit downgrade by S&P was absurd and that he would give the US a “Quadruple A” credit rating if possible. He also sees no double-dip recession in US. Articles on him can be found here and here. Maybe Warren knows something about US that we all don’t know?

Personally, I gravitate towards Jim Rogers’ view. I see huge trouble brewing in US and there’s a high chance that US will go back into recession. Also, like one of the articles said, America is running a giant Ponzi scheme – printing more of the green stuff to pay off the older debts. The truth is out there for all to see and the US has nowhere to hide now.

Sorry, the party has ended!

5th August 2011, Friday. This date will be etched in the minds of many investors worldwide. It was the day when the DOW crashed 512 points and the STI market plummeted 112 points. Many indices worldwide saw huge losses as well. The VIX index (a measurement of fear) spiked up to 32 points from 23 points the previous day. The main reason for the massive carnage is debt problem in US. The US credit rating was cut by S&P from top-tier AAA by a notch to AA-plus even though the debt ceiling was raised before August 2nd. My view is that the US is just plainly delaying the debt problem to a later date by raising the debt limit. They are digging a deeper hole to bury themselves. The deeper they dig, the worst it will become in the future. I feel the plunge on Friday is just the tip of the iceberg and worst things are waiting to happen. The party is over and US has to face reality. I think the best solution now would be to let the US economy crash to the bottom and start afresh. It’s a stark solution but I can’t see any other sane way out of this. Jim Rogers, the commodity guru, has also said in a recent CNBC interview that “the market should be allowed to bottom out as more money printing will make matters worse”. Meanwhile, China has told US openly that the “good old days” of borrowing are over.  The article can be read here. It seems like there more problems ahead for US. If China stops buying US debt, who else in the world can?

As an investor, this is the first time I have seen such a massive bloodshed. Back in 2008/2009 during the financial crisis, I wasn’t an investor yet and was just watching the markets from the sidelines. Of course, some of my holdings are currently down and I’m actually looking forward to prices dropping more so that I can buy assets on the cheap (I know this sounds sadistic). As an investor, one should be greedy when others are fearful.

I’m currently holding on to some stocks that are still undervalued. I sold off my overvalued stocks including Super Group around June to pave way for some cash. I’m looking to average down on my holdings should my holdings go down significantly. At this moment, accumulating cash is important so as to take advantage of any opportunities the market presents. Remember that what goes down, can go down further so don’t attempt to catch a falling knife as you will only end up hurting yourself. Invest when you think the dust has settled.