KFL – November 2019 monthly update

1
Monthly Update
November 2019
A word from the Manager
Kingfish delivered an adjusted NAV return of +0.4% in
October, well ahead of the New Zealand share market return
of -1.3% (S&P/NZX50G).
The Portfolio
There was a flurry of news across the portfolio in October.
Fisher & Paykel Healthcare (+10.7%) upgraded its profit
guidance for the 2020 fiscal year, in conjunction with
announcing it had received approval to sell its new Vitera
obstructive sleep apnea mask in the US earlier than expected.
This is the second profit upgrade from the company in less
than two months and highlights that the management team
continues to under-promise and over-deliver.
Infratil (+0.2%) hosted an investor day focused on two of
its key portfolio assets, Canberra Data Centres (CDC) and
Vodafone. Every time we get further colour on CDC, we are
impressed by the moat, the management and the growth
runway. Vodafone on the other hand is a turnaround story.
Infratil expects to improve the operating profit margins
significantly over time through cost reductions, consolidation
of legacy IT platforms, leadership in 5G, (where it will be first
to market in December), and growth in fixed wireless. The
turnaround will take some time but we are optimistic given
Infratil’s track record here, including its successful investment
in Z Energy.
Freightways (-5.2%) announced the conditional acquisition
of leading New Zealand refrigerated transport provider Big
Chill and also announced its first quarter trading update.
The trading update was disappointing and showed that the
subdued domestic courier market had slower revenue growth
than we expected, although the pricing initiatives that have
been implemented provided a boost. The acquisition appears
positive based on our initial research and channel checks,
with Big Chill a relatively solid business in an adjacent niche
market to the courier business with some network overlap. We
had trimmed our position in Freightways to a smaller level in
earlier months.
Port of Tauranga (+3.6%) provided first time guidance
for fiscal 2020 profits below previous expectations. This
reflected a soft first quarter of trading for logs and bulk
freight, although container volumes continued to grow
strongly. The softer log volumes reflect a recent well
publicised dip in pricing in China, with some New Zealand
forest owners deferring logging in anticipation of a recovery
in pricing, which appears to be underway. Regardless, these
volumes will still ultimately require harvesting and will still be
captured by the port in coming years.
Meridian (-11.5%) and the rest of the New Zealand
electricity sector saw sharp share price declines in October,
after Rio Tinto initiated a strategic review of its Tiwai Point
aluminium smelter (NZAS). It is considering various options
including closing down the smelter, which consumes
approximately 13% of New Zealand’s electricity. It is likely
NZAS will attempt to negotiate lower rates for its electricity
consumption from its suppliers to make the smelter more
financially viable.
Portfolio changes
We exited our small residual position in Restaurant Brands
during the month of September. The business continues
to perform well across the key brands in its portfolio
(KFC and Taco Bell), but has repeatedly struggled with
minor brands Pizza Hut and Carl’s Jr. The company is now
trading on a lofty valuation which we believe fully factors
in the transformation of Taco Bell stores, a successful
US acquisition, and the establishment of Taco Bell as a
successful franchise in New South Wales. We will continue to
monitor the company as an opportunity going forward.
We exited our minor position in Fletcher Building early
in the month (before the unfortunate Convention Centre
fire broke out). We exited because the investment thesis
had changed negatively from the time of our initial
entry and several of our catalysts have now played out.
We had already reduced our position to a small size,
1
Share Price Discount to NAV (using NAV to four decimal places)
KFL NAV
$
1.52
SHARE PRICE
$
1.49
DISCOUNT
1
2.2
%
as at 31 October 2019

2
Key Details
as at 31 October 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
$364m
GEARING
None (maximum permitted 20%
of gross asset value)
Sector Split
as at 31 October 2019
7
%
28
%
INDUSTRIALS
18
%

UTILITIES
INFORMATION
TECHNOLOGY
29
%
HEALTH
CARE
11
%
CONSUMER
STAPLES
The Kingfish portfolio also holds cash
reflecting the worsening risk/reward. On reflection, the
major shortcoming of the investment was that a sharp
Australian housing down-cycle impacted that business and
severely reduced earnings, with the ultimate benefits of
the Australian business improvement strategy now long-
dated and more uncertain. In addition, cost inflation in
New Zealand without volume or pricing growth ate away
corporate cost savings and resulted in lower earnings than
we expected. Ultimately, we will do better by redeploying
our capital into higher conviction ideas.
Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Limited
We also reduced our position in Meridian and increased our
positions in Infratil and Summerset during the month as we
deployed proceeds from recent sales.

33
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+3.5%+4.4%+24.2%+14.4%+13.0%
Adjusted NAV Return+0.4%(4.0%)+20.2%+14.2%+12.7%
Portfolio Performance
Gross Performance Return+0.5%(3.8%)+24.3%+17.1%+15.4%
S&P/NZX50G Index(1.3%)(0.6%)+23.3%+15.7%+14.9%
October’s Biggest Movers
Typically the Kingfish portfolio will be invested 90% or more in equities.
FISHER & PAYKEL
HEALTHCARE
+11
%
FREIGHTWAYS
-5
%
PUSHPAY HOLDINGS
-6
%
MERIDIAN ENERGY
-7
%
5 Largest Portfolio Positions as at 31 October 2019
THE A2 MILK COMPANY
15
%
FISHER & PAYKEL
HEALTHCARE
14
%
MAINFREIGHT
14
%
INFRATIL
9
%
SUMMERSET GROUP
8
%
The remaining portfolio is made up of another 8 stocks and cash.
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
Total Shareholder Return to 31 October 2019
Performance to 31 October 2019
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 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/
FLETCHER BUILDING
-12
%

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 12.2m of its
shares on market in the year to 31 October 2020
»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.