KFL – May 2020 monthly update

1
A WORD FROM THE MANAGER
Kingfish’s adjusted NAV rose +8.9% in April, outperforming the
local share market which bounced +7.5% (S&P/NZX50G).
In recent months we had maintained our large position in
a2 Milk, with multiple indicators suggesting it was benefiting
from pantry stocking and a strong presence in e-commerce
channels versus physical stores. The company’s April update
to fiscal 2020 guidance confirmed strong revenue growth and
strong flow through to profit margins, albeit some uncertainty
remains about how much is due to underlying strong demand
for the brand versus temporary factors.
Early in April Auckland Airport launched a larger equity
raising than we anticipated at $1.2 billion, which removes any
funding risk through to late 2021. The depressed share price
in anticipation of a capital raising coupled with the uncertainty
from COVID-19 created an attractive opportunity to increase our
position. The outlook is still somewhat uncertain: (1) Domestic
travel is yet to re-commence (at time of writing); (2) Short haul
travel appears contingent on implementing a Trans-Tasman
solution; (3) International long haul travel may not return in a
meaningful way until a COVID-19 vaccine has been developed
and may also hinge on how airlines weather the crisis. However,
Auckland Airport is a significantly long duration asset whose
value is driven primarily by medium and long-term passenger
levels, plus it has a large property portfolio. We participated in
the capital raise at the attractive $4.66 issue price.
Freightways provided an update with volumes sharply down
(- 65% in the main domestic courier business) under Level 4, as
expected, but freeing up in Level 3 as many non-essential retail
businesses look to couriers to deliver to customers that cannot
shop in store. The company settled on its Big Chill acquisition,
which was 80% operational even in Level 4, thanks to chilled
food delivery to supermarkets. However, Freightways sensibly
increased the equity mix of funding through issuing shares to the
vendor which has preserved its liquidity position. We do not think
the company will need to raise equity as it has ample liquidity
and a low cash burn rate which will improve from here, plus it
has broad based economic exposure without any specific links to
problem areas like international tourism.
Infratil updated the market on its portfolio businesses,
categorising them similarly to how we were thinking: those
broadly unaffected by COVID - 19 (Tilt, CDC, Longroad), other
defensive businesses (Trustpower, Vodafone) and more exposed
businesses (Wellington Airport, Retire Australia). The update
dispelled lingering concerns about potential looming funding
or equity needs. We had already analysed Infratil’s position
and taken a view that equity would not be required, which
allowed us to buy stock at attractive levels during March. The
update underscored our opinion that Infratil holds a high quality
portfolio of assets and is being skilfully managed within a
prudent risk framework.
Mainfreight quantified its performance early in April, with the
New Zealand Level 4 lockdown coinciding with the first week
of its financial year. The business was performing ahead of our
expectations overall (revenue -12% year on year in constant
currency terms). New Zealand had an understandably sharp
decline given the more severe lockdown ( - 40%). The US ( - 8%)
and Europe ( - 8%) were slightly better than expectations and
Australia was significantly better than expectations (+9%),
driven by strong market share gains. The company had seen
resilience in warehousing, some insulation of transport volume
from its focus on “everyday freight that lets a city breathe”, and
has pivoted to take up new opportunities in charter air freight.
The forward looking outlook was more positive than expected
and our discussion with management indicated they are seeing
opportunities to take market share and emerge stronger than
competitors, in line with our longer-term investment thesis.
Vista raised $65 million of equity at $1.05 to take liquidity
risks off the table, given the uncertain duration of cinema
closures globally. The company is working hard to simplify
the business and reduce costs so there may be further upside
to profit margins and cash flow subsequently. The company
has a strong product and moat with recurring revenue
streams which will continue once cinemas reopen. We
participated in the equity raising.
1
Share Price Discount to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places)
MONTHLY UPDATE
May 2020
KFL NAV
$
1. 5 1
$
1. 5 0
Share Price
DISCOUNT
1
WARRANT PRICE
0.0
%

$
0.0 5
as at 30 April 2020
Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Limited

2
KEY DETAILS
as at 30 April 2020
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
$1.37
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
249m
MARKET CAPITALISATION
$373m
GEARING
None (maximum permitted 20%
of gross asset value)
SECTOR SPLIT
as at 30 April 2020
5
%
28
%
INDUSTRIALS
19
%

UTILITIES
INFORMATION
TECHNOLOGY
31
%
HEALTH CARE
13
%
CONSUMER
STAPLES
The Kingfish portfolio also holds cash
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+16.6%(8.9%)
+16.0%+18.2%+12.2%
Adjusted NAV Return+8.9%(7.3%)+7.5%+14.0%+13.0%
Portfolio Performance
Gross Performance Return+9.3%(7.7%)+9.7%+16.6%+15.8%
S&P/NZX50G Index+7.5%(10.1%)+5.2%+12.6%+12.7%
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 combines the share price performance, the warrant price performance, the net value of converting any warrants into shares, and the dividends paid to shareholders. It
assumes all dividends are reinvested in the company’s dividend reinvestment plan, and that shareholders exercise their warrants, (if they were in the money), at warrant expiry date.
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/
PERFORMANCE to 30 April 2020

33
TOTAL SHAREHOLDER RETURN to 30 April 2020
Mar
2004
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
$
3.00
$
4.00
$
5.00
$
6.00
Share PriceTotal Shareholder Return
$
1.00
$
2.00
$
0.00
Mar
2017
Mar
2018
Mar
2019
Mar
2020
Mar
2005
APRIL’S BIGGEST MOVERS
Typically the Kingfish portfolio will be invested 90% or more in equities.
The remaining portfolio is made up of another 8 stocks and cash.
5 LARGEST PORTFOLIO POSITIONS as at 30 April 2020
PUSHPAY
+27
%
AUCKLAND
INTERNATIONAL
AIRPORT
+22
%
DELEGAT GROUP
+21
%
FREIGHTWAYS
+21
%
INFRATIL
+18
%
THE A2 MILK
COMPANY
16
%
FISHER & PAYKEL
HEALTHCARE
15
%
INFRATIL
15
%
MAINFREIGHT
11
%
AUCKLAND
INTERNATIONAL
AIRPORT
7
%

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
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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 its shares
on market
»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
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.
Warrants
»On 5 February 2020 a new issue of warrants
(KFLWF) was announced.
»The warrants were issued at no cost to eligible
shareholders and in the ratio of one warrant for every
four Kingfish shares held.
»The warrants were allotted to shareholders on 9
March 2020 and the warrants were listed on the
NZX Main Board from 10 March 2020. (Information
pertaining to the warrants was mailed/emailed to
shareholders in February 2020).
»The Exercise Price of each warrant is $1.64, to be
adjusted down for dividends declared during the
period up to the Exercise Date.
»The Exercise Date for the new warrants (KFLWF) is
12 March 2021.
»The final Exercise Price will be announced and an
Exercise Form will be sent to warrant holders in late
January 2021.