KFL – September 2022 Quarterly Newsletter

The importance of not leaping to conclusions
As we enter an uncertain period for the global economy it is tempting to presume
companies will automatically suffer. This ignores the most important piece of the
picture: what the companies themselves are doing.
As legendary investor Peter Lynch once put it, “Nobody can predict interest rates,
the future direction of the economy or the stock market. Dismiss all such forecasts
and concentrate on what’s actually happening to the companies in which you’ve
invested.”
Kingfish invests in companies that have wide economic moats and attractive
structural growth prospects. Every day the management teams go to work trying
to sustainably grow their businesses irrespective of the prevailing economic
conditions. This is particularly important in tough times as economic growth slows.
However, when the market adopts “black and white” thinking that companies are
automatically doomed, opportunities arise for investors.
Performance: a welcome positive quarter
for returns
Kingfish outperformed the local market in the quarter, delivering a gross
performance return of +3.3% and an Adjusted NAV return of +3.1%, versus the
1.8% return of the S&P/NZX50G index.
It was the first positive quarter for returns for both Kingfish and the New Zealand
market since the corresponding September quarter last year.
Macroeconomic conditions have been “driving the bus” for most of 2022, with
interest rates increasing far more sharply than expected from low levels. The
New Zealand 10-year Government Bond yield has increased from 2.4% at the
beginning of the year to peak at 4.3% in June and remains around that level. So,
while share markets remain very sensitive to the dynamic between inflation and
interest rates, they were not a headwind for returns over the quarter.
Kingfish’s companies remain focused on
executing their growth strategies
a2 Milk is one company where many have been quick to jump to pessimistic
conclusions given headwinds it has faced earlier in 2022. It was Kingfish’s best
performing position in the September quarter, up 24%. Kingfish had added to the
position earlier in the year.
Contrary to widespread fears, the company was well managed during another
challenging period, including managing a change in major English Label
distributor and pivoting volumes towards online platforms. It also “out-executed”
rivals in getting China Label product to consumers during the Shanghai
lockdowns.
The company reported a strong result for its year ended June, with infant formula
sales and group earnings well ahead of expectations in the second half. This is
despite ongoing weakness in China’s birth rate. However, a2 has focused on
taking market share in what is still a fragmented market.
a2’s brand metrics continue to improve, with effective marketing increasing its
share of voice and "top of mind" and "spontaneous" awareness metrics lifting
strongly.
Management has done a good job of not only fixing issues in the business but
building more robust capability and processes to deliver on its growth strategy.
The team is comfortable it is on track for the medium-term expectations it set out at
the October 2021 strategy day.
Infratil (+13% in the quarter) has proven itself the master of controlling its destiny,
delivering shareholders with returns averaging over 17% annually since its shares
listed in 1994.
Infratil has achieved this through investing in quality growth infrastructure assets
and managing those assets actively. It identifies companies with long-term
structural growth stories, complements this with value-add strategic initiatives and
realises value at the optimal time to move capital into the next opportunity.
This active portfolio management helped Infratil to outperform the market so far
during 2022 (up 10% versus the S&P/NZX50G down 15%). Infratil’s portfolio is
tilted towards essential infrastructure businesses which are inherently defensive,
however most of the recent outperformance is due to two big transactions that
realised significant value.
Firstly, the sale of the mobile telecom towers business of Vodafone New Zealand
(soon to be rebranded as ‘One NZ’). This transaction returned around 80% of the
capital Infratil originally invested in Vodafone, whilst divesting only around 10%
of the earnings stream. This is a fantastic result.
Secondly, Infratil is bringing in a new partner to help fund further growth at its
US renewable energy development business, Longroad Energy. This transaction
raised $500 million in capital. The deal value implies Infratil's stake, plus with
distributions to date, are worth approximately three times the capital it has
invested.
Together, these transactions delivered an uplift in Infratil's net asset value of more
than 15%. Each reflects years of planning and execution on the part of Infratil
and teams within its portfolio businesses. While we can't expect such major
transactions to occur every quarter, we do know Infratil is working hard behind
the scenes to lay the groundwork for future value creation.
Market pessimism can create attractive
investment opportunities
Summerset delivered a 13% return during quarter on the back of a solid half year
result and outlook.
Last quarter we highlighted that Summerset’s share price had fallen too far on the
back of concerns about the outlook for the New Zealand housing market and
Kingfish added to its position.
The housing market is only one factor affecting the business. The company is still
supported by growing penetration of retirement village living in New Zealand
and Australia. The timing of a decision on whether to move into a village is also
often determined by someone’s stage of life rather than the housing market.
Management called out robust demand for units at the result, despite deteriorating
housing market conditions.
Fisher & Paykel Healthcare (-7% in the quarter) weighed on Kingfish’s
performance during the quarter. The recent underperformance has largely been a
result of the market’s focus on short term performance being below expectations,
while the big picture remains attractive.
The company delivered subdued initial guidance for the first half of its 2023 fiscal
year. The company has seen demand for consumables lower than expected in its
hospital business. Customers are still working to reduce above-normal inventory
holdings, built up during the early stages of the less severe Omicron COVID
wave.
Our research tells us that usage of high flow nasal oxygen in hospitals has
increased. The inventory situation is leading to sales diverging from underlying
demand, which is a finite issue by nature. Before COVID the use of consumables
very closely tracked the installed hardware base, which has broadly doubled.
The company is working to lift usage of this installed base.
1
Share Price Premium to NAV (including warrant price on a pro-rated basis and using the net asset value per share, after expense, fees and tax, to four decimal places).
QUARTERLY NEWSLETTER
1 July 2022 – 30 September 2022
KFL NAV
$
1. 3 7
$
1. 4 9
Share Price
PREMIUM
1
9.1
%

as at 30 September 2022
Matt Peek
Portfolio Manager
14 October 2022
1
Warrant Price
$
0.00 2

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 a 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(1.5%)+11.0%+13.6%
Adjusted NAV Return+3.1%+5.5%+9.2%
Portfolio Performance
Gross Performance Return +3.3%+7.5%+11.6%
S&P/NZX50G Index+1.8%+0.4%+6.9%

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 percentage change in the adjusted NAV value,
»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 Airport9.2%
Contact Energy2.1%
Delegat Group2.8%
EBOS Group2.0%
Fisher & Paykel Healthcare14.2%
Freightways3.3%
Infratil17.1%
Mainfreight16.4%
Meridian Energy1.1%
Port of Tauranga2.4%
Pushpay Holdings2.2%
Ryman Healthcare3.6%
Summerset11.5%
The a2 Milk Company6.2%
Vista Group International3.8%
Equity Total97.9%
New Zealand dollar cash2.1%
TOTAL100.0%
PORTFOLIO HOLDINGS SUMMARY
as at 30 September 2022
COMPANY NEWS
Dividend Paid 23 September 2022
A dividend of 2.83 cents per share was paid to Kingfish shareholders on 23 September 2022 under the quarterly distribution policy. Interest in
Kingfish’s dividend reinvestment plan (DRP) remains high with 41% 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 2022
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
SIGNIFICANT RETURNS
IMPACTING THE PORTFOLIO
DURING THE QUARTER
THE a2 MILK
COMPANY
+ 24
%
SUMMERSET
GROUP
+13
%
INFRATIL
+13
%
FREIGHTWAYS
+10
%
PUSHPAY
HOLDINGS
-13
%
FOREIGN TAX COMPLIANCE ACT (FATCA) AND COMMON REPORTING
STANDARD (CRS)

As a result of the New Zealand Government agreeing to participate in the exchange of information with other jurisdictions under the Foreign Tax
Compliance Act (FATCA) and Common Reporting Standard (CRS), Financial Institutions are required to undertake due diligence to determine the
account holders’ jurisdiction of tax residence. If shareholders have not previously self-certified, they will receive a Tax Residency Self-Certification form
from Computershare depending on when they first purchased their securities. Please ensure you complete and return this important document if you
have not already done so. For more information please visit the IRD website: https://www.ird.govt.nz/international-tax/exchange-of-information/
crs/registration-and-reporting or contact Computershare if you are unsure of whether you have completed your form.