Monday, October 08, 2007

Kingsmen Creatives

Kingsmen Creatives, Ltd., through its subsidiaries, engages in the design and production of interiors, exhibitions, decorations, and museums in the Asia Pacific region. It has four segments: Exhibitions and Museums, Interiors, Research and Design, and Integrated Marketing Communication. The Exhibitions and Museums segment produces exhibition displays for trade shows and promotional events, as well as interiors and displays for museums and visitor centers. It manufactures and trades interior and exhibition furniture, fixtures, and displays; and offers tables, display items, modular systems, leitner systems, and chairs on rental basis, as well as provides electrical engineering and graphic design services. The Interiors segment provides interior fitting-out services for retail stores, restaurants, banks, department stores, corporate offices, and show rooms. The Research and Design segment offers design works for upmarket specialty stores, departmental stores, eateries, museums, visitors’ centers, corporate offices, showrooms, trade shows, events, promotional functions, and festivals. The Integrated Marketing Communication segment provides advertising, consultancy event management, marketing communication, and interactive promotion services. Kingsmen Creatives was founded in 1976 and is headquartered in Singapore, Singapore with additional offices in the Asia Pacific and the Middle East regions.

The company recently announced the contracts it has secured up to 3Q07:

This allows us to do a rough projection for FY07 results:

Based on 1H07 profitability margins, secured contracts up to Sep 07 and current price of $0.65, the forward P/E of the company is about 11.5. If the company is able to secure a couple of additional contracts in the final 3 months of FY07, this will lower the P/E even further.

Kingsmen is going through a period of economies of scale where its gross profits rise much more quickly than its expenses. The operating leverage is having a significant impact on its bottom line growth. If the strong Asian economic environment persists, Kingsmen will be in a good position to capitalise as it is poised for growth in Asia, such as the conventions business in Singapore IRs and Macau, and the mainland opportunities during the Beijing Olympics.

If Kingsmen's growth continues on its current trajectory, then the current market valuation is very reasonable.

Kingsmen is one of the growth holdings in my portfolio, after I picked it up earlier in August during the market turmoil.

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