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Kingsmen Creatives Ltd‘s Latest Earnings: What Investors Need to Know

Yesterday, communication design and production group, Kingsmen Creatives Ltd (SGX: 5MZ), announced its financial results for the third-quarter ended 30 September 2017.

Here’s a quick rundown of the financial figures from the latest quarter:

1. Revenue for the quarter fell 10.1% year-on-year to S$69.1 million. The firm has three business divisions – Exhibitions & Thematic, Retail & Corporate Interiors, Research & Design, and Alternative Marketing. All the business divisions saw revenue declines for 2017 third-quarter except the Exhibitions & Thematic division.

2. Gross profit margin for the latest period was 23.7%, a slight improvement from 23% seen a year ago.

3. Net profit, however, rose 33.4% to S$819,000. The better showing was mainly due to declines in the cost of sales and staff costs.

4. Consequently, basic and diluted earnings per share for the quarter was 0.41 Singapore cents, a rise from 0.31 cents seen in the previous year’s corresponding quarter.

5. The firm’s balance sheet slightly deteriorated for the third-quarter. As of 30 September 2017, Kingsmen Creatives had S$52.7 million in cash and cash equivalents, and S$11 million in total debt. This translates to a net cash position of S$41.7 million. In comparison, at the end of last year, the firm had S$65.1 million in net cash.

6. Kingsmen Creatives did not produce any free cash flow for the quarter, just like a year ago. For the latest quarter, it had a net operating cash inflow of S$2.6 million, but it spent S$3.3 million in capital expenditure.

For the nine months ended 30 September 2017, revenue fell 5.4% to S$214.1 million. However, net profit went up by 22.3% to S$3.6 million.

All business divisions posted higher revenue for the nine-month period, except for Exhibitions & Thematic division. This division saw a revenue decline “due to the completion of several key projects in 2016”. The main contributors to the division’s revenue were events and projects such as Desaru Adventure Waterpark, Downton Abbey Touring Exhibition, Formula 1 Singapore Grand Prix, National Day Parade 2017 and thematic projects in the region.

Going forward, Kingsmen Creatives said that it continues to see opportunities to grow and expand its reach into new markets and services, underpinned by the increasing demand for unique, engaging, diverse and original experiences.

It also added the following:

“We will continue to better integrate our service offerings, concurrently pursuing new and synergistic businesses, such as the development, ownership and marketing of intellectual property based on experiential attractions as new and potential earning streams for the Group. As at 31 October 2017, we have secured contracts of S$315 million, of which S$295 million is expected to be recognised in FY2017. Barring unforeseen circumstances, we expect FY2017 to be a profitable year.”

The firm’s shares are currently going at S$0.575 currently. This translates to a trailing price-to-earnings ratio of 9.1 and a trailing dividend yield of 4.3%.

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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 Sudhan P owns shares in Kingsmen Creatives Ltd.