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Kingfish posts $2m 1H loss as share prices fall

Monday 28th November 2011

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Investment company Kingfish made a $2 million first-half loss after writing $3 million off the value of its portfolio amid falling share prices.

The latest result compares with the $0.3 million loss reported for the previous first-half and a $0.1 million write-off from the portfolio.

“While the board is disappointed with the negative absolute performance, we believe it needs to be seen in context,” said chairman James Miller.

“The New Zealand market has been one of the best performing markets globally and the manager's performance has been in line with the NZ50 Gross Index,” Miller said.

Kingfish's adjusted net asset value (NAV) per share fell 2.9% in the six months while the index fell 2.8%. The NZX-listed Kingfish invests in New Zealand shares and unlisted companies.

The company said total shareholder return fell 2.7% in the latest six months but remains at 30.6% since inception in March 2004.Miller said most major equity markets fell by 15% to 25% over the six months.

The manager, Fisher Funds Management, is also suffering from Kingfish's lack of performance, its management fee accrued at 0.95% of gross asset value as opposed to 1.25% in the previous first half.

Kingfish paid 4.6 cents per share in dividends for the six months and on November 10 directors declared a 2.14 cents per share payout due on December 23.

The company said the 15.5% discount to NAV of Kingfish's share price reflected “investor nervousness due to the instability of global markets.”

Fisher Funds managing director Carmel Fisher said Kingfish lightened its holdings in Mainfreight and Ryman Healthcare during the six months, increasing its cash to 14% of the fund to reflect a slightly more cautious approach.

“Both companies remain high conviction holdings,” she said. Kingfish bought a small holding in the Summerset Group float but Ryman remains at a significantly higher weighting. Kingfish also participated in the Trade Me float.

Fisher said the fundamentals of Kingfish's portfolio are better than the broader market with analysts' consensus forecasts expecting the earnings of Kingfish companies to grow by 24% in the coming year and the shares trading at about 13.4 times earnings compared with 15.1 times in the broader market.

“We have a hand-picked selection of companies with strong moats around their businesses, sustainable earnings bases and high free cash flows at reasonable valuations,” Fisher said.

“We also endeavour to have a balanced mix of defensive and cyclical companies and are seeing early signs that the latter are slowly benefitting from the stuttering yet upward movement in the domestic economy.”

Kingfish shares are unchanged at 92 cents compared with their $1.0833 NAV at November 23. The shares have traded between 85 cents and $1.08 over the last 12 months.

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