KFL – September 2020 Quarterly Newsletter

1
SIGNIFICANT RETURNS IMPACTING THE
PORTFOLIO DURING THE QUARTER
Kingfish gained +3.7% (gross performance) for the quarter,
and the Adjusted NAV was up +3.3% for the period, while the
S&P/NZX50G benchmark index gained +2.6% for the same
period.
Permanent behaviour shifts - dynamic
companies will thrive
Charles Darwin said, “It is not the strongest of the species that
survive, nor the most intelligent, but the one most responsive to
change”.
COVID-19 has accelerated behaviour shifts that were going to
happen anyway and many forced changes will likely not fully
unwind. In these unusually dynamic times, it is the dynamic
companies that will thrive.
Dynamically widening the moat
Mainfreight, Vista, Ryman and Summerset have doubled down
on putting the customer first.
Mainfreight has always been customer obsessed. And people
obsessed. Mainfreight retained all of its permanent people
and paid “discretionary” bonuses in-line with last year during
COVID-19. This commitment to staff helps make the company’s
people go the extra mile and deliver superior customer service.
On the flip side, some of their competitors are responding to
the crisis by cutting costs, which arguably may result in lower
customer service. And that is one of the reasons Mainfreight’s
market share is accelerating. The company doubled down on
attracting new customers, announcing new business worth $67
million for the first quarter of its new financial year.
Vista released a cinema re-opening software package to help
their customers re-open seamlessly. For example, the software
allows the cinema to easily allocate “socially distanced”
seating. Vista’s Movio business released Movio Cinema
Essentials which helps a cinema sequence the re-buildup of its
marketing budget. Consider Satya Nadella’s (Microsoft CEO)
comment: “As COVID-19 impacts every aspect of our work
and life, we have seen 2 years’ worth of digital transformation
in 2 months”. Movio is the only scale digital marketing solution
for the film industry.
SUMMERSET
GROUP
+ 40
%
MAINFREIGHT
+1 8
%
DELEGAT GROUP
+1 6
%
VISTA GROUP
+14
%
THE A2 MILK
COMPANY
- 24
%
Ryman and Summerset have always put the customer first.
But they went above and beyond to protect their vulnerable
elderly residents during COVID-19. Potential new residents’
children considered their parents as being more vulnerable
during COVID-19 and have sought out providers where they
have confidence in their safety protocols and are “good
enough for mum”. Interest levels and resales have increased
significantly following New Zealand’s move to less restrictive
COVID Alert Levels. This will likely accelerate penetration of
retirement villages in New Zealand and Australia and drive
market share gains for Summerset and Ryman.
Customers are unlikely to forget this customer obsession by
Mainfreight, Vista, Summerset and Ryman. This should help
make customers more loyal in the future and will likely widen
the moat.
Dynamically investing for growth
Fisher & Paykel Healthcare’s nasal high flow therapy is
becoming the global standard of care for COVID-19. The
product was primarily used in the intensive care units of
hospitals prior to COVID-19. During COVID-19 it has
increasingly been used in wards or in the emergency
department. Often, different doctors service these different
areas of the hospital and they are becoming increasingly
more confident in using the product after seeing the benefits.
This will potentially permanently change behaviour and mean
their product is more widely used.
F&P is investing ahead of this potential permanent behaviour
shift. Total manufacturing capacity is likely to grow 60-70%
over the next 2-3 years and the majority of that will be
focussed on the hospital sector and in particular on nasal high
flow and non-invasive ventilation. Manufacturing capacity in
these areas is likely to approximately double. This confidence
in the outlook potentially permanently accelerates the
penetration of the large 50 million patient market in the nasal
high flow market.
1
Share price Premium to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places).
QUARTERLY NEWSLETTER
1 July 2020 – 30 September 2020
KFL NAV
$
1.6 7
$
0.1 1
$
1.6 5
Share Price
Warrant PricePREMIUM
1
0.1
%

as at 30 September 2020

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.
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+4.4%+20.5%+17.2%
Adjusted NAV Return+3.3%+16.5%+16.6%
Portfolio Performance
Gross Performance Return +3.7%+19.6%+19.7%
S&P/NZX50G Index+2.6%+14.0%+16.0%

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 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 Intl Airport7.0%
Contact Energy2.2%
Delegat Group4.1%
Fisher & Paykel Healthcare15.4%
Freightways3.2%
Infratil11.7%
Mainfreight15.9%
Meridian Energy1.1%
Port of Tauranga2.6%
Pushpay Holdings2.4%
Ryman Healthcare6.2%
Summerset8.6%
The A2 Milk Company13.5%
Vista Group International3.9%
Equity Total97.8%
New Zealand dollar cash2.2%
TOTAL100.0%
PORTFOLIO HOLDINGS SUMMARY
as at 30 September 2020
COMPANY NEWS
Dividend Paid 25 September 2020
A dividend of 3.25 cents per share was paid to Kingfish shareholders
on 25 September 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 September 2020
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
Dynamically rolling with the punches
a2 Milk had a recent disappointing trading update where
revenue expectations were significantly downgraded. The
cause of the forecast reduction in earnings was a sharp
inventory destock in the daigou or “surrogate-shopper”
channel. This was primarily a result of the resurgence of
COVID-19 in Victoria, Australia and travel restrictions.
a2 Milk reacted to this set-back and restored the demand/
supply balance by launching promotions to drive demand
while simultaneously restricting supply.
It’s important to remember that the company has moved
into other channels - cross border ecommerce and mother
and baby stores (MBS) - which are performing ahead of
expectations. Market share in the large and underpenetrated
MBS channel accelerated from 2.0% to 2.2%.
Sam Dickie
Senior Portfolio Manager
16 October 2020