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Kingsmen Creatives - RHB Research 2016-02-29: Moving Along With The Times

Kingsmen Creatives - RHB Research 2016-02-29: Moving Along With The Times  KINGSMEN CREATIVES LTD 5MZ.SI 

Kingsmen Creatives -  Moving Along With The Times 

  • While we think demand in the luxury high-end interior segment is likely to remain soft this year, Kingsmen has diversified its client base to F&B players, travel retail, affordable luxury and fashion brands. 
  • Exhibitions & museums segment has also grown significantly to be the main contributor of group revenue. 
  • We think Kingsmen has stepped out of 2015 as a stronger company. Upgrade to BUY but keep SGD0.75 TP (20% upside). 


Moving towards an all-rounded solutions provider for retailers. 

  • Kingsmen Creatives (Kingsmen) revealed that while retailers are more cautious on expansion, they have not been scrimping on marketing expenditure. It plans to move into data analytics, packaging design, services packaging or similar types of solution-providing services to continue to capture retailers’ marketing dollars. 
  • While we are positive on the strategy, we believe this is a long-term plan. 
  • In FY16, we expect to see mild growth in the interior segment led by expansion of high-fashion brands and interior fit-out works for food & beverage (F&B) players. 


All eyes on MICE. 

  • We believe Kingsmen would pursue trade show projects more aggressively this year. 
  • In line with the growing meetings, incentives, conferences and exhibitions (MICE) industry, management cited over 200 potential qualified shows around the region that Kingsmen has key presence in. 
  • Trade shows have been one of Kingsmen’s core areas of expertise. We believe a refocus on trade show projects would help to strengthen the group’s margins.


Upgrade to BUY, SGD0.75 TP pegged to 10x FY16F P/E. 

  • While the orderbook secured by Feb 2016 stood at SGD113m (-17.5% YoY), we believe this is a function of the smaller and shorter interior contracts with the mid-tier and F&B players. 
  • We keep our forecasts and TP but upgrade Kingsmen to BUY (from Neutral) as we think the market has oversold on the stock. 
  • The key risk would be delays in projects due to economic conditions.



Juliana Cai RHB Securities | http://www.rhbgroub.com/ 2016-02-29
RHB Securities SGX Stock Analyst Report BUY Upgrade NUETRAL 0.75 Same 0.75


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