KFL – September 2018 Quarterly Update Newsletter

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Notable Returns in the Quarter
»»The»September»quarter»was»another»positive»one»for»the»
Kingfish»portfolio»(seventh»in»a»row),»with»almost»all»of»the»
return»coming»in»August.
»»The»portfolio»delivered»+4.4%»gross»performance»return»
for»the»quarter»as»13»of»17»positions»delivered»positive»
contribution,»with»the»strongest»performers»being»Ryman,»
Mainfreight»and»Delegat.
»»We»initiated»a»small»position»in»Pushpay»during»the»quarter.
Market price performance during earnings season
more spectacular than the earnings themselves
On the whole, our portfolio scorecard for the results season was
solid. More of the portfolio companies beat consensus earnings
expectations than missed (5 beats, 2 inline and 4 misses so 64% of
results were inline or beats). This compares favourably to the market
that had 16 misses, 14 beats and 7 inline, so 56% of results were
inline or beats.
Despite that solid yet not spectacular earnings season from the
broad market, the stock market price performance was the best
during an earnings reporting season in 18 years.
The broad stock market price performance during the key August
reporting month was more heavily influenced by key twin drivers -
interest rates and currency.
In the key August month, US 10 year bonds rallied to see yields
close near 5 month lows. This more than translated to NZ bonds
which saw a sharp rally with yields breaking to fresh two year lows.
This saw the ratio of NZ 10 year bond yields vs US 10 year bond
yields breaking new multi decade lows – in short, interest rates fell
globally but they fell much more sharply in New Zealand.
On top of this, the NZD continued its fairly rapid depreciation,
falling two cents (0.68 to 0.66) during the month.
The combination of these two factors makes NZ a more
attractive destination to invest for offshore investors and we
saw heavy offshore inflows into the equity market during the
August month.
Mainfreight (+10%) also held its ASM during the quarter, with
generally positive outlook comments including “a growing
confidence due to improved trading results” and that “April to June
has seen strong revenue growth; profit has improved accordingly”.
Other comments indicate that this is likely to translate to a strong
first half result (on a weak prior period) with the company “quietly
positive” that results will sustain through FY19. This is relatively
positive language from a company that tends to set a high bar and
DELEGAT
GROUP
+20
%
RYMAN
HEALTHCARE
+17
%
MAINFREIGHT
+10
%
MERIDIAN
ENERGY
+9
%
AUCKLAND
AIRPORT
+8
%
under-promise. All geographies appear to be performing well,
with particular emphasis that Mainfreight “expects to see Asia
and the Americas improve markedly” after having been below
expectations recently. The ASM and associated annual report was
another reminder of the strong and extremely hard to replicate
culture MOAT Mainfreight has built around its business.
Pushpay added to the portfolio
We added Pushpay to the portfolio during the quarter.
Pushpay is a leading mobile payments and engagement provider
to the US faith sector. In the space of five years it has gone from
nowhere to become the fastest growing and preferred provider. It
delivers best in class product and service, and its domain expertise
combined with superior resources (both sales & research and
development) gives us comfort that Pushpay will retain this edge
over competitors.
We attended the investor day in the US during the September
month and were impressed by the depth of strength below senior
management levels and have been especially impressed by the
exceptionally strong customer feedback we have received from
our independent checks with various large churches in the US.
Pushpay is on track to reach breakeven on a monthly cash flow
basis prior to the end of calendar 2018, with FY2019 on the cusp
of EBITDA breakeven. It is not unreasonable to expect revenue
growth over the next three to five years to continue to compound
at ~30%+ p.a.
Pushpay remains a relatively early stage investment and we have
initiated a minimum position.
Quarter Update Newsletter
30 June 2018 – 30 September 2018
NAV
$
1.54
SHARE PRICE
$
1.39
WARRANT PRICE
$
0.07
Sam»Dickie»
Senior Portfolio Manager
11 October 2018
as»at»30»September»2018
DISCOUNT
1
9.0
%
¹ Share price discount/(premium) to NAV (including warrant price on a pro-rated basis)

2
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, New Zealand
Phone: +64 9 489 7094 | Fax: +64 9 489 7139
Email: enquire@kingfish.co.nz | www.kingfish.co.nz
If you would like to receive future
newsletters electronically please email
us at enquire@kingfish.co.nz
Performance
as at 30 September 2018
3 Months
3 Years
(annualised)
Five Years
(annualised)
Company Performance
Total Shareholder Return+3.4%+14.9%+11.7%
Adjusted NAV Return+3.7%+17.5%+13.0%
Portfolio Performance
Gross Performance Return +4.4%+20.3%+15.8%
S&P/NZX50G Index+4.6%+18.7%+14.6%

Non-GAAP Financial Information
Kingfish uses non-GAAP measures, including adjusted net asset value, adjusted NAV return, gross performance
return and total shareholder return. The rationale for using such non-GAAP measures is as follows:
»adjusted net asset value – the underlying value of the investment portfolio adjusted for capital allocation
decisions after fees and tax,
»adjusted NAV return – the net return to an investor after fees and tax,
»gross performance return – the Manager’s portfolio performance in terms of stock selection, before fees
and tax, and
»total shareholder return – the return to an investor who reinvests their dividends, and if in the money,
exercises their warrants at warrant maturity date for additional shares.
All references to adjusted net asset value, adjusted NAV return, gross performance return and total shareholder
return in this newsletter are to such non-GAAP measures. The calculations applied to non-GAAP measures are
described in the Kingfish Non-GAAP Financial Information Policy. A copy of the policy is available at
http://kingfish.co.nz/about-kingfish/kingfish-policies/
LISTED»COMPANIES
%»Holding
Abano Healthcare1.7%
Auckland Int Airport5.3%
Delegat Group3.8%
Fisher & Paykel Healthcare11.8%
Fletcher Building3.1%
Freightways9.2%
Infratil7.2%
Mainfreight11.4%
Meridian Energy3.0%
Michael Hill International3.4%
Port of Tauranga3.3%
Pushpay Holdings2.0%
Restaurant Brands NZ4.1%
Ryman Healthcare7.3%
Summerset6.3%
The A2 Milk Company10.0%
Vista Group International4.0%
Equity»Total96.9%
New Zealand dollar cash3.1%
TOTAL100.0%
Portfolio Holdings Summary
as at 30 September 2018
Company News
Dividend Paid 28 September 2018
A dividend of 3.00 cents per share was paid to Kingfish shareholders
on 28 September 2018 under the quarterly distribution policy.
Interest in Kingfish’s dividend reinvestment plan (DRP) remains high
with 45% 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.