KFL – December 2020 Quarterly Newsletter

1
SIGNIFICANT RETURNS IMPACTING THE
PORTFOLIO DURING THE QUARTER
Living an investing lifetime in 12 months
On the face of it, 2020 was an easy game. Kingfish was up 28%
for the calendar year, outperforming the NZSE50 by 13%.
However, that required navigating a late-stage bull market, a
savage bear market, an early-stage aggressive bull market and
more recently a grinding bull market.... all in the space of 12
months.
We learned more lessons from Mr Market in 12 months than many
investors learn in a lifetime.

Robust process is always critical, but
especially in a crisis
We spoke to our Kingfish portfolio companies, their competitors,
their suppliers, their customers, and industry experts on 120
occasions in the 6 weeks ending March 31, 2020. Our process
went into over-drive. We 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
during the crisis? 4. How do you ensure you emerge from this
better positioned than your competitors?
That allowed us to quickly separate our companies into four broad
buckets:
1. Companies that were expected to trade well through the
COVID-19 crisis: Early on it was clear that Fisher & Paykel
Healthcare would be a beneficiary of the crisis. Delegat sells
90% of its product to people drinking wine at home and wine
was in hot demand during the early lockdowns! a2 Milk was
an early beneficiary as Chinese mothers stockpiled infant
formula. However, we learned later that the unwind of those
stockpiles coupled with the daigou network grinding to a halt
meant a2 traded poorly through the crisis. Pushpay was an
unexpected beneficiary as churches closed and the best way to
continue giving to your church was via the Pushpay app.
2. Companies that have more defensive earnings streams: We
were relaxed about Infratil’s portfolio companies’ earnings.
Data and communications investments Canberra Data Centres
and Vodafone NZ, plus electricity investments Trustpower and
Tilt all had defensive earnings.
3. Companies that have more economically sensitive earnings
streams: Mainfreight and Freightway’s volumes are tied to the
economic cycle. However, Mainfreight has such small market
shares outside of NZ and such superior customer service that
we thought it could offset at least some of the inherent cyclicality
in its earnings. Ryman and Summerset’s earnings are at least
partially linked to the housing cycle which in turn is at least
partially linked to the economic cycle. As it turned out, the
rebound in the economic cycle and the housing market was so
sharp, it made your head spin!
MAINFREIGHT
+5 2
%
INFRATIL
+4 8
%
MERIDIAN
ENERGY
+5 0
%
SUMMERSET
GROUP
+4 0
%
CONTACT
ENERGY
+3 4
%
4. Companies that are in the eye of the storm: With borders and
cinemas shut globally, it was clear Auckland Airport and Vista
were right in the eye of the storm.
The combination of our existing tried and true process, plus the
enhancements during the crisis allowed Kingfish to outperform the
S&P/NZX50G in the bull market prior to COVID-19, during the
worst of the market fall in March, and in the sharp rebound since.

Dynamic companies thrive
Cash is king: Auckland Airport realised very early that COVID
was going to significantly impact its business. So, it raised capital
early and aggressively. This has allowed Auckland Airport to
navigate the unprecedented shock to its revenues with clear eyes.
Go the extra mile for your customers: With a lot of people
struggling during COVID there was a real opportunity to help
your customers and build long-term loyalty. Going the extra
mile to help when other suppliers are unable to deliver the usual
level of service provided a chance to gain new customers.
Vista released a cinema re-opening software package to help
its customers get back on their feet. 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-build-up of its marketing budget. It
is early days, but Vista has been winning big customers off its
smaller competitors recently, even though its products are more
expensive.
Look after your people, especially in a crisis: Mainfreight did just
this - retaining all its permanent people and paying discretionary
bonuses in-line with last year during COVID-19. Actions like this
supercharge the existing strong team culture at Mainfreight. As
a result, its people want to go the extra mile and deliver superior
customer service. This is one of the reasons Mainfreight’s market
share accelerated at the fastest pace ever during the crisis.
Be prepared ahead of time: House price inflation (HPI) is a key
driver of Summerset’s business. And HPI is outside of its control.
For this reason, Summerset has been doing stress tests on the
impact of changing HPI on its earnings and balance sheet for
years. It was obvious early during COVID that Summerset’s
balance sheet could withstand a severe slump in sales (almost no
new sales for 9 months). This provided investors that understood
this a great opportunity to buy shares at bargain prices.

1
Share price Premium to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places).
QUARTERLY NEWSLETTER
1 October 2020 – 31 December 2020
KFL NAV
$
1.9 0
$
0.3 7
$
2.04
Share Price
Warrant PricePREMIUM
1
12.0
%

as at 31 December 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+29.2%+28.3%+22.3%
Adjusted NAV Return+15.7%+19.9%+17.6%
Portfolio Performance
Gross Performance Return +16.4%+23.0%+20.7%
S&P/NZX50G Index+11.4%+15.9%+15.7%

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 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 Airport6.4%
Contact Energy2.1%
Delegat Group3.7%
Fisher & Paykel Healthcare14.6%
Freightways3.6%
Infratil15.0%
Mainfreight20.1%
Meridian Energy0.5%
Port of Tauranga2.3%
Pushpay Holdings1.7%
Ryman Healthcare5.8%
Summerset9.4%
The A2 Milk Company8.5%
Vista Group International3.4%
Equity Total97.1%
New Zealand dollar cash2.9%
TOTAL100.0%
PORTFOLIO HOLDINGS SUMMARY
as at 31 December 2020
COMPANY NEWS
Dividend Paid 18 December 2020
A dividend of 3.46 cents per share was paid to Kingfish shareholders
on 18 December 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 December 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
Seize the day: Fisher & Paykel Healthcare aggressively
accelerated its production of hospital products that remain in
heavy demand during COVID. The company was prepared
ahead of time with a strong balance sheet and 30% of its
production capacity idle for just such an emergency. Fisher &
Paykel Healthcare seized the day and saved lives.
Our view on the offer for Infratil
In December, AustralianSuper made an indicative non-binding
offer to acquire all the shares in Infratil. We think about the value
of our Infratil holding in three components:
1. The valuation for the current portfolio of assets.There is
significant valuation upside to Infratil’s high quality assets like
Canberra Data Centres, Tilt, Longroad Energy and Vodafone
that all have wide moats and many years of growth runway
ahead.
2. Infratil’s ability to create value in the future from new assets.
Infratil have grown their Net Asset Value at a compound
annual growth rate of 18% for more than 25 years! You
would be hard pressed to find a track record like that
anywhere in the world. Illustrating their forward thinking,
Infratil were circling Qscan (their most recent acquisition) for
years as management is constantly working on creating the
next contribution to value, years in advance.
3. Opportunity cost. We did not end up with a very large
position in Infratil by mistake – the position encapsulates many
years of research and continually comparing the investment to
other scarce opportunities in the NZ market.
In short, we believe the initial offer is too low.
Sam Dickie
Senior Portfolio Manager
15 January 2021