KFL – October 2019 monthly update

Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Ltd
1
Monthly Update
October 2019
A word from the Manager
Market Overview
Kingfish posted an adjusted NAV return of +1.0% in
September, which slightly lagged the local share market
return of +1.6% (S&P/NZX50G).
Portfolio News
In September we attended a2 Milk’s Investor Strategy Day
and China Market Immersion in Shanghai, plus had many
other related meetings and store visits as part of the trip.
Overall the trip was very encouraging and allowed us to
witness first hand several of the concepts underpinning
our investment thesis. We sat in the living room of one
Chinese mother and heard first hand why she chooses to
use a2 Platinum infant formula for her 15 month old son.
We were very impressed by the passionate and ambitious
a2 management team including meeting and spending
time with new Chief Executive Greater China, Li Xiao.
Other key takeaways included the position that the brand
already holds in the market, and potential for a2 to grow
further into e-commerce and offline channels, where it is
under-represented. a2’s brand is well positioned for the fast
growing social e-commerce platforms including Pinduoduo
and Little Redbook. We believe the lacklustre market
response in the wake of the day reflects disappointment
that the company did not more tangibly illustrate the return
metrics it is seeing to justify an acceleration in investment
in marketing in China. However, it is consistent that a2
Milk decline to provide this level of detail as aspects are
commercially sensitive. We continue to back management to
deliver on the significant market share and opportunity for
sales growth.
Summerset acquired a retirement village site in Cranbourne
North, near Melbourne. This is its first site for development
in Australia. This type of acquisition was well foreshadowed
by the company and does not settle until early 2021.
The company will progress planning in the meantime. The
village adds to its New Zealand development pipeline and
units will likely be available for sale commencing late 2021 or
early 2022. We view this as Summerset executing to plan and
there are other similar opportunities in the pipeline.
Pushpay held an investor day in Seattle, and later in the
month also updated guidance for its 2020 financial year.
This provided some further assurances that new CEO Bruce
Gordon has made positive moves since starting, including
realigning the sales and customer service effort. The previous
approach had seen a soft start to the financial year under the
previous CEO. The company increased its operating earnings
expectation to be US$23.0-25.0 million (up US$4.5 million
from prior guidance), with the improvement primarily the
result of cost savings. The company is also looking to build
out its product to provide a more fulsome offering to its
church customers in a range of areas.
Portfolio Changes
Following the partial take-over of Restaurant Brands, we
were left with a small position. We used the high valuation
the company was trading at to exit the remaining position
during the month. Restaurant Brands remains on the fishing
pond list and we will potentially re-enter when the levels are
more attractive.
1
Share Price Discount to NAV (using NAV to four decimal places)
KFL NAV
$
1.52
SHARE PRICE
$
1.44
DISCOUNT
1
5.2
%
as at 30 September 2019

2
Key Details
as at 30 September 2019
FUND TYPE
Listed Investment Company
INVESTS IN
Growing New Zealand companies
LISTING DATE
31 March 2004
FINANCIAL YEAR END
31 March
TYPICAL PORTFOLIO
SIZE
15-25 stocks
INVESTMENT CRITERIA
Long-term growth
PERFORMANCE
OBJECTIVE
Long-term growth of capital and
dividends
TAX STATUS
Portfolio Investment Entity (PIE)
MANAGER
Fisher Funds Management
Limited
MANAGEMENT
FEE RATE
1.25% of gross asset value
(reduced by 0.10% for every
1% of underperformance
relative to the change in the
NZ 90 Day Bank Bill Index with
a floor of 0.75%)
PERFORMANCE
FEE HURDLE
Changes in the NZ 90 Day Bank
Bill Index + 7%
PERFORMANCE FEE
10% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$1.43
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
244m
MARKET
CAPITALISATION
$352m
GEARING
None (maximum permitted 20%
of gross asset value)
Sector Split
as at 30 September 2019
2
%
29
%
HEALTH CARE
18
%

UTILITIES

MATERIALS
29
%
INDUSTRIALS
12
%
CONSUMER
STAPLES
7
%
INFORMATION
TECHNOLOGY
The Kingfish portfolio also holds cash
Performance
to 30 September 2019
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+2.3%+3.4%+15.3%+12.7%+12.4%
Adjusted NAV Return+1.0%(0.1%)+11.3%+12.2%+13.2%
Portfolio Performance
Gross Performance Return+1.1%+0.5%+14.8%+14.9%+15.9%
S&P/NZX50G Index+1.6%+4.0%+16.8%+14.1%+15.8%
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 expenses, fees and tax,
» adjusted NAV return – the net return to an investor after expenses, fees and tax,
»gross performance return – the Manager’s portfolio performance in terms of stock selection, before expenses, 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 monthly update 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/

3
Total Shareholder Return
to 30 September 2019
Mar
2004
Mar
2005
Mar
2006
Mar
2007
Mar
2008
Mar
2009
Mar
2010
Mar
2011
Mar
2012
Mar
2014
Mar
2015
Mar
2013
Mar
2016
Share Price/Total Shareholder Return
$
2.50
$
3.00
$
2.0 0
$
1.50
$
1.00
Share PriceTotal Shareholder Return
$
4.50
$
5.00
$
0.50
$
0.00
Mar
2017
$
3.50
Mar
2018
$
4.00
Mar
2019
September’s Biggest Movers
Typically the Kingfish portfolio will be invested 90% or more in equities.
The remaining portfolio is made up of another 9 stocks and cash.
5 Largest Portfolio Positions
as at 30 September 2019
FLETCHER BUILDING
+16
%
PUSHPAY HOLDINGS
+10
%
SUMMERSET
+10
%
RESTAURANT BRANDS
+8
%
THE A2 MILK COMPANY
-8
%
THE A2 MILK
COMPANY
14
%
FISHER & PAYKEL
HEALTHCARE
14
%
INFRATIL
14
%
MAINFREIGHT
9
%
SUMMERSET GROUP
8
%

Disclaimer: The information in this update 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 update 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 update 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
4
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142
Phone: +64 9 488 8777 | Fax: +64 9 488 8787
Email: enquiry@computershare.co.nz | www.computershare.com/nz
About Kingfish
Kingfish is an investment company
listed on the New Zealand Stock
Exchange. The company gives
shareholders an opportunity to
invest in a diversified portfolio
of between 15 and 25 quality
growing New Zealand companies
through a single, professionally
managed investment. The aim
of Kingfish is to offer investors
competitive returns through
capital growth and dividends.
Capital Management Strategies
Regular Dividends
»Quarterly distribution policy introduced in
June 2009
»Under this policy, 2% of average NAV is targeted
to be paid to shareholders quarterly
»Dividends paid by Kingfish may include dividends
received, interest income, investment gains
and/or return of capital
»Shareholders who prefer to have increased
capital rather than a regular income stream have
the opportunity to participate in the company’s
dividend reinvestment plan (DRP)
»Shares issued to DRP participants are at a 3%
discount to market price
»Kingfish became a portfolio investment entity on
1 October 2007. As a result, dividends paid to
New Zealand tax resident shareholders have not
been subject to further tax
Share Buyback Programme
»Kingfish has a buyback programme in place allowing
it (if it elects to do so) to acquire up to 9.7m of its
shares on market in the year to 31 October 2019
»Shares bought back by the company are held as
treasury stock
»Shares held as treasury stock are available to be re-
issued for the dividend reinvestment plan
Warrants
»Warrants put Kingfish in a better position to grow
further, operate efficiently and pursue other capital
structure initiatives as appropriate
»A warrant is the right, not the obligation, to purchase
an ordinary share in Kingfish at a fixed price on a
fixed date
»There are currently no warrants on issue
Management
Kingfish’s portfolio is managed
by Fisher Funds Management
Limited. Sam Dickie (Senior
Portfolio Manager) and Matt Peek
(Investment Analyst) have prime
responsibility for managing the
Kingfish portfolio. Together they
have over 30 years combined
experience and are very capable
of researching and investing in the
quality New Zealand companies
that Kingfish targets. Fisher Funds
is based in Takapuna, Auckland.
Board
The Manager has authority
delegated to it from the
Board to invest according to
the Management Agreement
and other written policies.
The Board of Kingfish
comprises independent
directors Alistair Ryan (Chair),
Carol Campbell, and Andy
Coupe; and non-independent
director Carmel Fisher.