A Deeper Look at a Steady Dividend-Paying Company – Part 1

Kingsmen Creatives Ltd (SGX: 5MZ) could be a company worth studying. The company’s shares are up by 74% from 1 Jan 2010 to its closing price last Friday. Over the same timeframe, the capital gains of the SPDR STI ETF (SGX: ES3) – a proxy for the market barometer, the Straits Times Index (SGX: ^STI) – was just 13%.

From 2010 to 2014 (the company’s financial year coincides with the calendar year), Kingsmen Creatives has distributed a steady annual dividend totaling S$0.20 per share.

Financial year Dividend per share (Singapore cents)
2010 4.0
2011 4.0
2012 4.0
2013 4.0
2014 4.0

Source: Kingsmen’s financial reports

Although the shares of Kingsmen Creatives have been climbing, as Foolish investors, we should look behind the curtains to understand its drivers of growth.

A closer look

Kingsmen Creatives is a corporate marketing services provider. Its business is organized into four major divisions.

The Exhibitions and Museums division relates to the production of exhibition displays for shows and events, interiors and displays for museums, and the production of displays for theme parks. The Retail and Corporate Interiors division involves the provision of interior fitting-out services to retail stores and commercial and retail properties.

Meanwhile, the Research and Design division deals with design works for a variety of events, shows, stores, and functions. Finally, the Alternative Marketing division sees the company provide event management and branding consultancy services.


Source: Kingsmen’s financial reports

Over its past five financial years from 2010 to 2014, Kingsmen Creatives’ revenue grew at an annual rate of 9.4%. Since 2010, sales of the Retail and Corporate Interiors division have increased by 50% in total and had provided the majority of Kingsmen Creatives’ overall revenue growth.

For 2014, the Retail and Corporate Interiors division and Exhibitions and Museums division made up 52% and 41% of Kingsmen Creatives’ total sales respectively.

In 2014, sales of the Exhibitions and Museums division benefitted from major projects such as the Formula 1 Singapore Grand Prix and the Singapore WTA Finals. Meanwhile, demand from key retail clients such as Tiffany & Co., H&M, Christian Dior, and Uniqlo contributed to growth in the Retail and Corporate Interiors division.

As of the end of 2013, more than 70% of the company’s revenue came from Singapore and Greater China.

Foolish summary

The exercise above is to look at just the revenue dynamics of Kingsmen Creatives. As a next step, we should observe if the firm’s top-line growth has trickled down to the bottom-line in order for it to sustain its growth in share price.

But, that’s for the next article.

As of Kingsmen Creatives’ closing price of S$0.99 last Friday, the firm traded at a trailing price-to-earnings ratio of about 11, and has a trailing-12-months dividend yield of 4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.