Kingfish – Dec 2016 Quarter Update Newsletter

1
NAV
$
1.34
SHARE PRICE
$
1.36
WARRANT PRICE
$
0.06
as at 31 December 2016
Quarter Update Newsletter
1 October 2016 — 31 December 2016
Notable Returns in the Quarter
After posting very strong performance in the first three
quarters of 2016, the New Zealand share market was
weak in the December quarter, with the S&P/NZX50G
Index falling 6.5%. Over the quarter the Kingfish
performed in line with the index, down 6.4% on a gross
performance basis.
This weak fourth quarter came after a seven year bull run,
where our share market has been supported by a strong
economy, growing corporate earnings and high dividend
yields on many New Zealand companies. This backdrop
supported share prices and also generated much foreign
interest in the New Zealand market. In the fourth quarter,
we began to see this dynamic change as expectations of
increasing global interest rates, inflation and economic
growth somewhat reduced the relative attractiveness of
New Zealand shares. As a result, the New Zealand market
underperformed most global indices in the fourth quarter.
Our best performing stock in the quarter was Mainfreight
(up 18%), which released strong half year results that
highlighted continued market share gains and solid margin
improvement. Particularly pleasing were the improvements
in their European, Asian and Australian operations.
Mainfreight’s recent investor day in Melbourne showcased
their international growth strategy and we see a huge growth
opportunity should they successfully build scale in these large
global markets.
There were two material corporate developments in the
portfolio during the quarter. Firstly, Restaurant Brands
announced the acquisition of 37 Taco Bell and 45 Pizza
Hut stores predominantly located in Hawaii, following its
acquisition of 42 KFC stores in New South Wales earlier in the
year. We believe Restaurant Brands’ management has proven
highly effective in operating quick service restaurants and
these new businesses in Australia and Hawaii provide another
avenue for growth.
Secondly, there was a well publicised partial takeover offer
for 50.1% of Abano Healthcare by Healthcare Partners.
This is the fourth takeover offer for Abano since 2007, which
MAINFREIGHT
+18
%
FISHER & PAYKEL
HEALTHCARE
-14
%
AUCKLAND
INTERNATIONAL
AIRPORT
-15
%
RYMAN
HEALTHCARE
-15
%
MICHAEL HILL
INTERNATIONAL
-23
%
highlights the value others see in the growing corporate
dental platform they have built (Lumino in New Zealand/
Maven in Australia). We believe the takeover offer is
opportunistic and would prefer Abano to remain listed and
pursue its existing strategy unencumbered.
Two detractors from returns in the quarter were retirement
village operators Ryman Healthcare and Summerset, as
concerns about elevated residential property prices and
valuation levels in the sector had an impact on sentiment.
These are both well-run growth businesses that have been
strong contributors to portfolio returns over the long term.
Despite this recent share market turbulence, our economy and
corporate sector are performing well. The economy has been
growing at a rapid clip (3.5%), the unemployment rate (4.9%) is
at levels not seen since before the global financial crisis, and
our housing and construction markets are buoyant. While we
have seen a slight pullback in share prices, we are comfortable
with our select portfolio of quality businesses and believe it
will perform well over the medium to long term.
Ashley Gardyne
Senior Investment Analyst
Fisher Funds Management Limited
2 February 2017
Carmel Fisher
Managing Director
Fisher Funds Management Limited
2 February 2017
PREMIUM
1.5
%

2
Performance
to 31 December 2016
3 Months
3 Years
(accumulated)
Five Years
(accumulated)
Total Shareholder Return*+2.1%+40.4%+129.1%
Kingfish Adjusted NAV*(6.5%)+32.5%+97.5%
Gross Performance^ (6.4%)+42.9%+130.4%
S&P/NZX50G Index(6.5%)+45.3%+110.1%
^ Gross of fees and tax and adjusting for capital management initiatives
*Definitions of non-GAAP measures:
Adjusted Net Asset Value (NAV)
The adjusted NAV per share represents the total assets of Kingfish (investments and cash) minus any liabilities
(expenses and tax), divided by the number of shares on issue. It adds back dividends paid to shareholders and
adjusts for:
»the impact of shares issued under the dividend reinvestment plan at the discounted reinvestment price;
» shares bought on-market (share buybacks) at a price different to the NAV, and;
» warrants exercised at a price different to the NAV at the time exercised.
Adjusted NAV assumes all dividends are reinvested in the company’s dividend reinvestment plan and excludes
imputation credits.
The directors believe this metric to be useful as it reflects the underlying performance of the investment portfolio
adjusted for dividends, share buybacks and warrants, which are a capital allocation decision and not a reflection of
the portfolio’s performance.
Total Shareholder Return (TSR)
The TSR combines the share price performance, the warrant price performance (when warrants are on issue), the net
value of converting warrants into shares and dividends paid to shareholders.
TSR assumes:
»all dividends paid are reinvested in the company’s dividend reinvestment plan at the discounted
reinvestment price and exclude imputation credits, and;
»all shareholders that have received warrants (for free), have subsequently exercised their warrants at the
warrant expiry date and bought shares (if they were in the money).
The directors believe this metric to be useful as it reflects the return of an investor who reinvests their dividends and,
if in the money, exercises their warrants at warrant maturity date for additional shares. No metric has been included
for investors who choose other investment options.
Disclaimer: The information in this newsletter has been prepared as at the date noted on the front page. The information has been prepared as a general summary of the matters covered only, and it is
by necessity brief. The information and opinions are based upon sources which are believed to be reliable, but Kingfish Limited and its officers and directors make no representation as to its accuracy
or completeness. The newsletter is not intended to constitute professional or investment advice and should not be relied upon in making any investment decisions. Professional financial advice from
an authorised financial adviser should be taken before making an investment. To the extent that the newsletter contains data relating to the historical performance of Kingfish Limited or its portfolio
companies, please note that fund performance can and will vary and that future results may have no correlation with results historically achieved.
Kingfish Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 489 7094 | Fax: +64 9 489 7139
Email: enquire@kingfish.co.nz | www.kingfish.co.nz
The Kingfish quarter update newsletter is produced for the June and
December quarters only. The annual and interim reports cover the
March and September periods. If you would like to receive future
newsletters electronically please email us at enquire@kingfish.co.nz
LISTED COMPANIES% Holding
ABANO HEALTHCARE3.1%
AUCKLAND INTERNATIONAL AIRPORT3.6%
DELEGAT GROUP3.0%
EBOS GROUP5.4%
FISHER & PAYKEL HEALTHCARE10.6%
FREIGHTWAYS9.0%
INFRATIL7.3%
MAINFREIGHT12.6%
MERIDIAN ENERGY3.8%
METRO PERFORMANCE GLASS2.7%
MICHAEL HILL INTERNATIONAL2.8%
PORT OF TAURANGA4.7%
RESTAURANT BRANDS4.6%
RYMAN HEALTHCARE9.6%
SUMMERSET4.9%
TEGEL GROUP2.7%
TRADE ME3.3%
VISTA GROUP INTERNATIONAL3.3%
Z ENERGY1.9%
NON-LISTED COMPANY
WATERMAN HOLDINGS0.0%
EQUITY TOTAL98.9%
NEW ZEALAND DOLLAR CASH1.1%
TOTAL100.0%
Portfolio Holdings Summary
as at 31 December 2016
Company News
Dividend Paid 22 December 2016
A dividend of 2.91 cents per share was paid to Kingfish shareholders
on 22 December 2016 under the quarterly distribution policy. Interest
in Kingfish’s dividend reinvestment plan (DRP) remains high with
46% of shareholders participating in the plan. Shares issued to
DRP participants are at a 3% discount to market price. If you would
like to participate in the DRP, please contact our share registrar,
Computershare on (09) 488 8777.