KFL – June 2020 Quarterly Newsletter

1
SIGNIFICANT RETURNS IMPACTING THE
PORTFOLIO DURING THE QUARTER
Solid returns through a crisis thanks to
active management
Kingfish gained +23.4% (gross performance) for the quarter, and the
Adjusted NAV was up +21.2% for the quarter. The S&P/NZX50G
benchmark index gained +16.9% for the same period.
Our tried and tested investment process,
coupled with some enhancements, stood
up well during COVID-19
At face value the local stock market appears to be defying the effects
of COVID-19. But on closer inspection the solid performance of the
benchmark S&P/NZX50G index has been driven by only a handful of
large companies, especially Fisher & Paykel Healthcare and a2 Milk.
Over the twelve months to 30 June 2020 they have delivered all of the
benchmark’s returns and then some. This is extraordinary and masks the
inferior performance of a lot of other companies. What this tells us is how
important active management is. It is always critical to handpick a small
number of high-quality companies... but especially so now.
Sticking to and enhancing a successful process proved vital
during the crisis
We continue to think about the same four broad “buckets” within our
portfolio:
»Bucket 1. companies that should trade well through the COVID-19
crisis (“beneficiaries”)
»Bucket 2. companies that have more defensive earnings streams
(“defensives”)
»Bucket 3. companies that have more economically sensitive
earnings streams (“economically sensitive”)
»Bucket 4. companies that are in the eye of the storm (“eye of the
storm”)
We owned less of buckets 3 and 4 and more of buckets1and 2 into
the teeth of the crisis. For instance, we maintained a small position in
Auckland Airport right until the share price fully captured all the obvious
risks. We had cut our weighting in Summerset in late January and we ran
our very large positions in Fisher & Paykel Healthcare and a2 Milk right
into the trough of the crisis on 23 March. We then pivoted by trimming
some of our positions in buckets 1 and 2 and buying positions in buckets
3 and 4. We trimmed Fisher & Paykel Healthcare, Meridian and some
a2 Milk near the apex of the crisis and switched that into Auckland
Airport and Vista, especially via their equity issuance. We were also
adding to our heavily oversold positions in Summerset and Mainfreight.
Starting March 23rd, global stock markets staged their fastest 30%
bounce... ever. And in that environment we saw almost the mirror image
of the March carnage.
In the last three weeks to 30 June, we have seen markets pause for breath
as COVID-19 and the economic fall-out remains a key risk. And we
have seen another almost mirror image. We have reduced our holdings
in some “eye of the storm” companies and increased our weightings in
some of the “beneficiaries”.
PUSHPAY
HOLDINGS LTD
+15 9
%
DELEGAT GROUP
LTD
+58
%
AUCKLAND INTL
AIRPORT LTD
+32
%
VISTA GROUP
INTERNATIONAL
+ 31
%
FREIGHTWAYS
LTD
+ 31
%
The combination of our existing tried and true process, plus the
enhancements during the crisis allowed us to outperform the S&P/
NZX50G in the bull market prior to COVID-19, during the worst of the
market fall in March, in the sharp rebound until June 8th and then again
in the current environment until June 30th.
1
Share price discount to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places).
QUARTERLY NEWSLETTER
1 April 2020 – 30 June 2020
KFL NAV
$
1.6 5
$
0.0 7
$
1.6 2
Share Price
Warrant PriceDISCOUNT
1
1. 0
%

as at 30 June 2020
Bucket 1 – Beneficiaries: Fisher & Paykel Healthcare, a2
Milk, Pushpay, Delegat
Fisher & Paykel Healthcare and Pushpay have seen their customers
embrace their products like never before as a result of COVID-19. This is
very powerful and has structurally increased the value of the companies
as higher levels of sales are achieved earlier and their products may
ultimately be used by a larger number of people.
Fisher & Paykel Healthcare’s nasal high flow therapy is proving a more
effective treatment for COVID-19 patients versus traditional invasive
alternatives such as intubation (an ‘endotracheal tube’ physically inserted
down the throat and into the airways). Longer-term, this experience could
prove a powerful proof point for practitioners that F&P’s products should
be used for treatment of far more respiratory patients than before.
Pushpay has experienced a strong acceleration in use of its products.
Our recent church calls confirmed that digital giving has remained at
elevated levels and is not expected to revert when congregants can
physically return to church.
Bucket 2 – Defensives: Meridian, Infratil
Infratil updated the market on its portfolio businesses, categorising them
similarly to our “buckets”. Its data centre business CDC has continued
to see strong demand and announced it will be establishing sites in
New Zealand. In June, Infratil raised $300 million in new equity to
accelerate investment in several of its growth businesses that are seeing
opportunities for attractive returns, such as CDC, and we participated.
+60%
+40%
+20%
0%
-20%
-40%
-60%
7
(21)
(50)
13
12
33
23
53
36
(18)
(8)
(2)(2)
(36)
(4)
(16)
Depths of the crisis:
1-31 March
Bucket 1: beneficiaries
Bucket 2: defensives
Bucket 3: economically
sensitive
Bucket 4: eye of the storm
Market recovery:
31 March to 8 June
Current environment:
8-30 June
Overall:
1 March to 30 June
Performance of “buckets” during COVID crisis

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.
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+28.5%+19.3%+13.9%
Adjusted NAV Return+21.2%+16.8%+15.6%
Portfolio Performance
Gross Performance Return +23.4%+19.9%+18.7%
S&P/NZX50G Index+16.9%+14.6%+14.9%

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 Airport6.5%
Delegat Group3.8%
Fisher & Paykel Healthcare18.0%
Freightways3.7%
Infratil11.3%
Mainfreight14.7%
Meridian Energy2.3%
Port of Tauranga3.7%
Pushpay Holdings2.4%
Ryman Healthcare5.9%
Summerset7.3%
The A2 Milk Company14.6%
Vista Group International3.5%
Equity Total97.7%
New Zealand dollar cash2.3%
TOTAL100.0%
PORTFOLIO HOLDINGS SUMMARY
as at 30 June 2020
COMPANY NEWS
Dividend Paid 26 June 2020
A dividend of 3.06 cents per share was paid to Kingfish shareholders
on 26 June 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 30 June 2020
Sam Dickie
Senior Portfolio Manager
20 July 2020
Bucket 3 – Economically sensitive: Port of Tauranga,
Mainfreight, Freightways, Ryman, Summerset
Mainfreight provided a granular assessment of the impacts on each
business early in the 2021 fiscal year. Its Australian business is
performing very strongly and growing at a double-digit rate year-on-year
despite COVID-19 as a result of market share gains from competitors.
The New Zealand domestic transport business fell 40-45% during Alert
Level 4 but bounced back to be growing year-on-year.
Ryman and Summerset moved early to implement strict measures to
protect their vulnerable elderly residents and prevent COVID-19 from
entering its villages. This and other initiatives like “happy hour in a bag”
have built on their strong brands. It will likely accelerate penetration of
retirement villages in New Zealand and Australia and share gains from
independent and lower quality operators as potential residents seek out
a provider “good enough for mum”.
Bucket 4 – Eye of the storm: Auckland Airport, Vista
Auckland Airport raised enough equity capital to take any balance
sheet funding stress off the table right through until December 2021. The
$1.2 billion equity raising was larger than expected and can sustain
the balance sheet even if the current extremely low level of passengers
moving through the airport continues through 2021. That is not their
base case expectation, but we applaud the prudent approach. Auckland
Airport is an attractive, long duration, critical infrastructure asset and was
priced near our long-term bear case valuation. We added to the position
including in the capital raising at a discounted price. People will travel
again.
Most cinemas globally are shut. Many cinemas paused paying their
fees to Vista. This put the company’s liquidity position under stress. We
participated in the company’s equity raising at $1.05, which ensures
Vista has sufficient liquidity for an extended period. COVID-19 aside,
Vista has continued to grow its market share to 50% for its core cinema
product globally outside of China. It is multiple times the size of its next
biggest global competitor. The company will return to growth when
cinemas inevitably re-open.
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
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