KFL – December 2022 Quarterly Newsletter

In the December quarter, Kingfish delivered a Gross Performance Return of 2.8%
and an Adjusted NAV return of 2.6%, versus the 3.7% return of the benchmark
(S&P/NZX50G) index. The Adjusted NAV return for calendar 2022 was a
disappointing -16.1%.
It is important to reflect on why the 2022 outcome occurred. For quality growth
companies including those in Kingfish, it was largely because valuations had
become elevated, against the backdrop of low interest rates. For instance,
Mainfreight was trading at 29 times forward earnings, versus its 10 year average
of around 20 times. This is now at around 16 times. This dynamic has generally
not played out to the same degree for New Zealand’s defensive companies or
those with lower growth prospects.
With other companies in a similar situation, Kingfish now looks more attractive
on this basis than for quite some time. Plus, history tells us that the ability of
companies to grow earnings over time will drive share prices and returns to
shareholders.
Kingfish’s companies are focused on fostering successful cultures, delivering for
their customers, taking market share and sustainably becoming larger and more
profitable in future years. This came through loud and clear when we visited
companies and met their management teams numerous times over the quarter.
They are certainly not pessimistic about the future!
Mainfreight is more confident than ever on fulfilling its long-term global
growth potential
With its share price down -28% for the year, you would be forgiven for
thinking that Mainfreight had a terrible year. In fact, over the course of the
year, expectations for profit in the current and next year have increased by
double-digit percentages. All of their share price fall (and then some) is down
to a combination of the valuation becoming cheaper than historical averages,
as discussed above, and general concerns about the global macroeconomic
outlook.
At its investor day in October, Mainfreight discussed its ongoing strategy of
growing and intensifying its network through adding new branches across all
products and in all regions. This is simply a continuation of the same successful
strategy that has seen it grow its branch network to over 300 branches globally,
adding around 70 branches over the past 5 years.
Investment into new facilities is improving quality and efficiency. This assists with
customer wins and retention and therefore boosts profitability. The new facilities
include purpose-built transport (trucking) cross-docks and larger warehouses,
including in Europe and the US. The company has historically been hesitant to
invest in those regions because performance has lagged expectations. Now they
are seeing signs of real traction emerging in terms of sales, customer wins, and
profitability, which makes them confident to invest in those large and lucrative
markets.
Mainfreight's management team and board has a fantastic track record of
profitable growth. They turn up to work every day very much aligned and
hungry to grow the business in spite of a potentially tougher environment. It is
encouraging to see multiple executives add to their significant shareholdings
recently, underscoring how strongly they believe in the future prospects of the
business.
Infratil continues to benefit from strong demand for secure outsourced
data centres
During the quarter we visited the facilities of Infatil’s largest business – Canberra
Data Centres (CDC) – in both Sydney and Auckland. It was impressive to see first-
hand the calibre of CDC’s management team and their comprehensive approach
to building data centres.
Their focus on being the most secure, cost effective, and environmentally
responsible data centre offering has seen it become a market leader in Australia.
CDC’s new Auckland data centres have opened almost full, with 82 megawatts
of capacity recently added to its pipeline in Auckland (compared to 28
megawatts currently). By leveraging its Australian experience, CDC has attained
first mover advantage in the New Zealand hyperscale datacentre market.
In Sydney, CDC’s CEO Greg Boorer highlighted the company's strong growth
trajectory and confirmed that he expects to maintain earnings growth at
around 25% annually over the medium term. This is supported by CDC's
pipeline and significant customer demand, backed by continuing mega trends
including increasing data usage, increasing security requirements, and elevated
cybersecurity risks.
Infratil shares were broadly unchanged over the quarter but delivered a +11%
return in 2022.
The retirement sector is firmly out of favour as investors fixate on house
prices
During the quarter retirement village operators Ryman (-37%) and Summerset
(-18%) saw continued weakness in their share prices. For most prospective
residents the decision to move into a retirement village is a decision prompted
by changing personal circumstances and will not be delayed by house prices.
However, selling their home in a soft market is taking longer which drags on the
completion of retirement unit sales.
Ryman raised a small amount of equity for the first time in 23 years by
introducing a dividend reinvestment plan. This was in response to a surprising
increase in net debt by $400 million to $3.0 billion as at its half year. Ryman’s
debt is a key reason why we have reduced Kingfish’s position size over time
(including recently), favouring Summerset instead (which has considerably lower
gearing: 29% versus 45%).
Summerset continues to grow its unit sales year on year as it builds out its
pipeline of new villages. It is on track to increase the number of new units built
annually from 600 to 800 over time. This will be achieved in part via its fledgling
Australian operations, which will commence unit deliveries in 2023 after years
of sourcing and consenting sites. An ageing population and an increase in the
popularity of retirement living in both markets will also continue to assist over
time. In 2023 construction is likely to be at the lower end of this range, but
Summerset’s landbank and sites already underway support the medium-term
ambition.
Despite the subdued near-term outlook we think both companies are offering
attractive value as investments over the medium term.
Negative sentiment can turn into a positive
It has been reinforced this year that when market sentiment becomes particularly
negative towards a company or sector, the turning point can be very powerful.
a2 Milk has endured a tough time in recent years, but delivered solid business
performance in 2022 against low expectations. It returned +21% during the
quarter and +24% for the year.
Last quarter we flagged that Fisher & Paykel Healthcare’s (FPH) recent
underperformance has largely been a result of the market’s focus on short
term risks, including a transient destocking cycle that was suppressing sales
of its nasal high flow oxygen hospital consumables. The big picture remains
attractive. During the quarter, the company delivered its half year result ahead
of expectations, as this dynamic faded away. The company then saw sequential
improvement in hospital consumables sales every month since May,

which is unseasonably strong. During the quarter FPH shares
returned +23%.
1
Share price premium to NAV (using the net asset value per share, after expense, fees and tax, to four decimal places).
QUARTERLY NEWSLETTER
1 October 2022 – 31 December 2022
KFL NAV
$
1. 3 7
$
1. 3 8
Share Price
PREMIUM
1
0.5
%

as at 31 December 2022
Matt Peek
Portfolio Manager
16 January 2023
1

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(5.4%)+4.5%+10.8%
Adjusted NAV Return+2.6%+2.8%+8.5%
Portfolio Performance
Gross Performance Return +2.8%+4.3%+10.7%
S&P/NZX50G Index+3.7%(0.1%)+6.4%

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 Airport7.9%
Contact Energy3.0%
Delegat Group2.8%
EBOS Group2.3%
Fisher & Paykel Healthcare15.5%
Freightways3.3%
Infratil16.5%
Mainfreight16.7%
Meridian Energy1.6%
Port of Tauranga2.4%
Pushpay Holdings2.0%
Ryman Healthcare2.0%
Summerset9.2%
The a2 Milk Company5.7%
Vista Group International3.5%
Equity Total94.4%
New Zealand dollar cash5.6%
TOTAL100.0%
PORTFOLIO HOLDINGS SUMMARY
as at 31 December 2022
COMPANY NEWS
Dividend Paid 16 December 2022
A dividend of 2.86 cents per share was paid to Kingfish shareholders on 16 December 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 31 December 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
FISHER & PAYKEL
HEALTHCARE
+ 23
%
THE a2 MILK
COMPANY
+ 21
%
EBOS GROUP
+17
%
SUMMERSET
GROUP
-18
%
RYMAN
HEALTHCARE
- 37
%
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.