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Why Is Kingsmen Creatives Ltd Near A 52-Week Low?

The last 12 months haven’t been kind to Singapore’s stock market as seen in how the Straits Times Index (SGX: ^STI) has slipped by around 20% to 2,784 points last Friday.

But if you thought that was bad, there have been companies that have fared even worse. One such firm is the corporate marketing outfit Kingsmen Creatives Ltd (SGX: 5MZ).

Based on their closing price of S$0.625 last Friday, Kingsmen’s shares have fallen by 37% compared to a year ago and are sitting just 3.5 cents higher than a 52-week low of S$0.59.

For some background, Kingsmen Creatives is a corporate marketing services provider. Its business is organized into four major divisions: Exhibitions and Museums; Retail and Corporate Interiors; Research and Design; and Alternative Marketing. To learn more about the company, you can go here and here.

With that, let’s dig into some of the possible reasons behind Kingsmen’s dismal stock market performance over the past year:

1) Poor results for the first-quarter of 2016

Kingsmen’s most recent results, released three weeks ago, were poor. Despite seeing its revenue for the first-quarter of 2016 growing by 18.4%,  Kingsmen clocked a loss of S$882,000, down from the profit of S$787,000 seen a year ago.

2) Uncertainties ahead

Over the past five years from 2010 to 2014, Kingsmen Creatives’ revenue had grown in each year at a compound annual rate of 9.5%. The company had also maintained its dividends at S$0.04 per share for that period.

But in 2015, Kingsmen Creatives’ revenue suffered a 2.5% decline. Its bottom-line would also have declined were it not for one-time gains on (a) the sale of its interest in an associate and (b) fair value adjustments for its remaining stake in said associate.

Furthermore, the company also ratcheted its dividend downward, from S$0.04 per share to S$0.03.

That said, Kingsmen’s management team commented in the 2016 first-quarter earnings that it is “cautiously optimistic about the outlook for [its] various business segments.” So, it’s not all doom and gloom here.

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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 James Yeo doesn’t own shares in any companies mentioned.