Kingsmen Creatives Limited (SGX: 5MZ) is a leading communication design and production group with a network of 21 offices around Asia. The group has four main divisions – exhibitions and thematics, retail and corporate interiors, research and design and alternative marketing. Some of its clients include global brands such as Chanel, Gucci, LVMH Group and Tiffany and Co.
Kingsmen was started 43 years ago in 1976, and though its business has remained relatively unchanged during this time, the group had encountered numerous challenges along the way. It has had to adapt and evolve over time in order to remain relevant and has also managed to refresh its management team as the two original founders, Benedict Soh and Simon Ong, take on consulting and strategic roles.
I felt it would be interesting to track how the group has grown over the years, and also the new capabilities it has picked up during this time.
Integrated resorts and theme parks
In 2009, Singapore announced the construction of two integrated resort developments, one in the Marina Bay area (which eventually became Marina Bay Sands) and one in Sentosa (Resorts World Sentosa). Kingsmen managed to successfully bid for the theme park project Universal Studios Singapore, which was its very first theme park contract at the time. Its Interiors division had fabricated sets pieces for corporates and retail clients before, and the clinching of the theme park project was simply an extension of Kingsmen’s capabilities.
Because of this maiden theme park contract, Kingsmen then went on to build up a thematics team which won the Disneyland Shanghai bid, and the group has now moved on to bid for many other theme park projects around Asia.
The slowdown in luxury retail
In 2015, Kingsmen encountered its first serious setback when China’s Xi Jinping announced a nationwide clampdown on luxury goods in order to curb corruption. In just a few months, demand for luxury goods collapsed, and many luxury retailers had to hold back their expansion plans. This resulted in fewer luxury boutiques being opened around Asia, and Kingsmen’s Interiors division suffered as a result.
The group responded to this by moving into doing fit-outs for fast fashion and affordable luxury brands instead. Initially, gross margins were negatively impacted as this space had more competitors compared to the luxury space. However, over time, gross margins improved though it was still not as high as pre-2015 levels.
Intellectual property division
More recently, on February 2018, Kingsmen signed their first intellectual property (IP) deal with Hasbro Inc (NASDAQ: HAS) to open the world’s first NERF Family Entertainment Centre (FEC) in Singapore’s Marina Square. The IP was granted to Kingsmen for its ability to co-conceptualise and design the FEC based on their experience, knowledge and project management skills. Subsequently, Kingsmen announced the clinching of two more IP – one with Discovery Communications Inc (NASDAQ: DISCA) for Animal Planet travelling shows, and another with Hasbro for edutainment-related FECs.
An evolution, not a revolution
It’s interesting to note that Kingsmen has undergone an evolution through the years, rather than a revolution. They were simply transferring their know-how and skillsets to a different arena, and then building those up to adapt to new market conditions. Though the new IP division has yet to provide any meaningful contribution to group revenue or earnings, Kingsmen’s experience in building up their thematic capabilities and team shows that the group has a track record of being able to capture new opportunities in order to grow and expand.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Royston Yang owns shares in Kingsmen Creatives Limited.