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What Investors Need to Know About Kingsmen Creatives Ltd’s Latest Earnings

Kingsmen Creatives Ltd (SGX: 5MZ) is a communication design and production group serving global clients in the divisions of Exhibitions & Thematic, Retail & Corporate Interiors, Research & Design, and Alternative Marketing.

Last week, the company announced its financial results for the first quarter ended 31 March 2018. Here are 10 things investors should know from the earnings announcement:

1. Revenue for the latest quarter slipped 7.8% year-on-year to S$61.0 million. The fall was largely due to a 29.1% slump in revenue from the Retail & Corporate Interiors division. This division recorded revenue of S$24.9 million in the latest quarter, a decrease of S$10.2 million, due to soft demand for interior design and fit-out services from the retail segment. Clients such as Coach, Fendi, and Ralph Lauren contributed to the top-line for the division.

2. The Exhibitions & Thematic division, the largest contributor to total revenue for the quarter, posted revenue growth of 18.5%. The increase in revenue was due to the completion of several significant events during the quarter such as Art Stage Singapore 2018, Buds by Shangri-La Singapore, and Singapore Airshow 2018.

3. Gross profit fell from S$15.6 million a year ago to S$15.4 million in the latest quarter, a fall of 1.2% year-on-year. Consequently, gross profit margin improved from 23.5% to 25.2%.

4. Net profit, however, grew 16.2% to S$445,000.

5. For the latest quarter, net profit margin stood at 0.7%, an improvement from 0.6% a year back.

6. Diluted earnings per share in the reporting quarter was 0.22 Singapore cent, up from 0.19 Singapore cent last year.

7. The balance sheet weakened for the quarter. As at 31 March 2018, Kingsmen Creatives had S$67.5 million in cash and cash equivalents, and S$17.1 million in total debt. This gives a net cash position of S$50.4 million. In comparison, at the end of last year, the balance sheet carried S$59.7 million in net cash.

8. Operating cash flow improved from a negative S$11.5 million last year to a negative S$3.3 million in the latest quarter, with capital expenditure coming in at S$5.6 million. In the first quarter of 2017, the firm spent S$2.8 million in capital expenditure.

9. Looking ahead, Kingsmen Creatives said:

“The Group will continue to strengthen its foothold in its core businesses and existing markets, while embarking on the next phase of transformation with its entry into new business areas to introduce additional earning streams. The diverse industries the Group serves and ability to create and build experiences give the Group unique opportunities to continue its growth.”

10. The company had secured contracts of S$195 million, as at 30 April 2018, of which S$156 million is expected to be recognised this financial year.

Kingsmen Creatives shares ended Friday at S$0.595, translating to a price-to-earnings ratio of 12 and a dividend yield of 4.2%.

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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.