KFL – March 2020 Quarterly Newsletter

1
Significant returns impacting the
portfolio during the quarter
Dear shareholders,
It has been an extremely eventful quarter in financial markets.
Coronavirus has had extreme ramifications for millions of
businesses around the globe, who are having to deal with the
implications of government sanctioned lockdowns. The Kingfish
team is fully functional and currently working from our respective
home offices. We had detailed and well-practiced business
continuity plans in place and have access to all required research
and trading systems.
Market update
When we have a such a sharp and material pandemic
driven economic event, all previous modelling goes out
the window. BUT, our process is more critical now than
ever.
I will leave the hyperbole to the newspapers. Our thoughts
are with those acutely affected by the COVID-19 crisis.
We have spoken to our Kingfish portfolio companies, their
competitors, their suppliers, their customers and industry
experts on 120 occasions in the past six weeks - more than
eight times per company. Our process has gone into over-
drive! During this process we have asked four questions: 1.
How are you ensuring the safety and security of your team,
your customers and your suppliers? 2. How is your liquidity
position? 3. What is a bear, base and bull case outcome
for your revenues and profits? 4. How do you ensure you
emerge from this better positioned than your competitors?
Our companies fit into four broad buckets:
Companies that should trade well through the
COVID-19 crisis
We have spoken with a2 Milk several times, have received
feedback from channel contacts and are monitoring real
time demand indicators. The company has fared well, taking
market share as mothers have shored up their infant formula
supplies, often through the online channel where a2 is very
strongly positioned.
Our analytical process during the last quarter has
been quite different for Fisher & Paykel Healthcare.
COVID-19 is a respiratory illness and Fisher & Paykel
Healthcare are respiratory and humidification experts. The
company is ramping production in its hospital division
as rapidly as possible to treat COVID-19 patients with its
invasive ventilation and its high flow oxygen devices and
consumables. Most of our analysis has centred around sizing
the amount of extra volume the company will sell in this
FISHER & PAYKEL
HEALTHCARE
+37
%
RYMAN
HEALTHCARE
-37
%
SUMMERSET
GROUP
-38
%
AUCKLAND
INTERNATIONAL
AIRPORT
-43
%
VISTA GROUP
-68
%
crisis. We have learned that it pays to have flex capacity on
hand as a manufacturer – Fisher & Paykel Healthcare have
been able to ramp up 30% extra hospital product capacity
within two weeks.
Companies that have more defensive earnings
streams
The bulk of Infratil’s portfolio is well positioned to endure
COVID-19, namely data and communications investments
Canberra Data Centres and Vodafone NZ, plus electricity
investments Trustpower and Tilt. Although Wellington Airport
is operating well below capacity, this only comprises 12% of
Infratil’s net asset value and is actually much less reliant on
international travel than Auckland Airport. The balance sheet
is in a solid position - we think Infratil has more than twice as
much in sources of capital as it is likely to have uses for capital
over the next twelve months.
Companies that have more economically
sensitive earnings streams
Mainfreight has over $300m of liquidity available with no
debt refinancing requirements for the next two years so will
be able to withstand a protracted downturn. We have added
to our position amid the uncertainty as the company will make
good long-term decisions and emerge well positioned to
outperform competitors and take market share. Mainfreight’s
aim is to pull through without letting go of its most valuable
assets, its people. The company is seeing its team members
reciprocate its loyalty to them - they are proud to be
providing an essential service to keep New Zealand and the
globe going during the crisis.
We have run stress tests on our retirement operators Ryman
and Summerset, testing liquidity, cash flow, and balance
sheet strength. Ryman has $300m headroom on its debt
facilities and Summerset has over $400m, both with no
meaningful expiries for two+ years. Both can withstand large
falls in new sales and resales without breaching covenants.
Long wait lists and residents often having medical events
that necessitate moving into a village or into care mitigates
Quarter Update Newsletter
1 January 2020 – 31 March 2020
NAV
$
1.39
SHARE PRICE
$
1.29
as at 31 March 2020
WARRANT PRICEDISCOUNT
1
$
0.036.6
%
1
Share price discount to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places).

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
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(17.4%)+10.7%+8.7%
Adjusted NAV Return(14.0%)+10.6%+11.1%
Portfolio Performance
Gross Performance Return (14.5%)+13.3%+13.7%
S&P/NZX50G Index(14.8%)+10.8%+10.9%

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 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
Auckland Int Airport5.0%
Delegat Group2.9%
Fisher & Paykel Healthcare18.6%
Freightways3.9%
Infratil10.1%
Mainfreight15.7%
Meridian Energy2.3%
Port of Tauranga3.9%
Pushpay Holdings1.7%
Ryman Healthcare5.2%
Summerset5.7%
The A2 Milk Company16.6%
Vista Group International2.3%
Equity Total93.9%
New Zealand dollar cash6.1%
TOTAL100.0%
Portfolio Holdings Summary
as at 31 March 2020
Company News
Dividend Paid 27 March 2020
A dividend of 3.24 cents per share was paid to Kingfish
shareholders on 27 March 2020 under the quarterly distribution
policy. Interest in Kingfish’s dividend reinvestment plan (DRP)
remains high with 43% 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
Performance
as at 31 March 2020
Sam Dickie
Senior Portfolio Manager
20 April 2020
the risk that sales are weak for an extended period of time.
This is a time when both operators will provide assurance
and comfort for their residents and further build their brand
strength.
Companies that are in the eye of the storm
Auckland Airport is a very long duration near monopoly
asset, and is priced near our long-term bear case valuation, so
we added to the position. People will travel again.
Almost every cinema globally is shut - Vista’s customer base
is acutely hurting. We have spoken to Vista’s management
and board a number of times and also had calls with multiple
global cinema chains. We have modelled the monthly liquidity
position to test if the company can survive a prolonged crisis
situation. The long-term story and moat around Vista’s core
cinema business is intact.