KFL – September 2023 Quarterly Newsletter

In the September quarter, Kingfish delivered a gross performance return
of −4.9% and an adjusted NAV return of −5.1%, versus the −5.2% return
of the S&P/NZX50 gross index. It was a tough quarter for global share
markets with the MSCI World index down −3.5%. New Zealand shares
lagged other markets in part due to the economic climate remaining
tougher locally than offshore.
Defensive companies outperformed in a tough environment for New
Zealand companies
Quarterly performance was led by Summerset (+8% return in the
quarter) which proved its weak March quarter sales performance was
an aberration by delivering a much-improved result for the June quarter.
Despite the pressure on house prices since late 2021, Summerset has been
able to hold its pricing and capture development margins. It continues to
see strong demand for its offering.
Two resilient performers were Infratil (+1%) and Contact Energy (+3%).
Infratil noted at its annual meeting that it is tracking towards the top end
of its profit guidance for the year ahead. Contact delivered a strong finish
to its financial year and promising outlook for the new year. It will see its
newly built Tauhara geothermal plant begin to contribute to earnings from
2024, replacing more expensive gas generation. The company expects
a new supply agreement to be reached with the Tiwai Point aluminium
smelter at a higher price, which would enable an increase to its dividend.
Several of our economically exposed companies were not immune
from the more challenging environment. Mainfreight (−8%) provided
a first quarter update in July, which was weaker than expected as it is
seeing lower freight volumes through its network. Trading conditions in
Freightways’ (+1%) core courier business remained challenging, with
volumes in the six months to June averaging around 2% lower than the
corresponding period in 2022. Underlying same-customer volumes
have been weaker, 5-6% down, however the company is winning new
customers by virtue of its superior delivery performance. Vulcan Steel
(−6%) has seen slower market conditions in its New Zealand steel
distribution business, with the Australian business performing better.
Positively, its number of Active Trading Accounts have reached record
levels. a2 Milk (−15%) has continued to be a clear leader in the China
infant formula category, taking market share in its key sales channels and
improving brand awareness to new highs. However, this strong execution
is being blunted by fewer births in China than we expected which is
weighing on its growth.
Overall, we have increased Kingfish’s exposure to defensive companies
over the last 12 months, which has mitigated some of this headwind. We
also remain positive about the companies doing it tough right now, they
are operating effectively and taking share from competitors. This bodes
well for when the headwinds abate.
Fisher & Paykel, Infratil’s Longroad Energy, and Vista showcased their
businesses in the US
Three portfolio companies with meaningful US businesses hosted investor
days in short succession in September. It is always beneficial seeing a
company’s business in action and speaking at length with a wide range of
people from different areas of the business on long-term perspectives.
Longroad has the opportunity to develop a portfolio of renewable
electricity projects in the US, largely solar farms with battery storage. Its
highly capable and aligned team have developed a large pipeline of
development projects. By building this out, Longroad expects to grow
operating earnings threefold to around US$600 million. The Infratil team
has also proven it is adept in supporting and crystallising value from these
types of platforms.
The Fisher & Paykel Healthcare (FPH) investor event coincided with
the official opening of its third manufacturing building in Mexico. A
highlight was observing the culture of the team and focus on continuous
improvement. Its people, or ‘collaborators’ as they are referred to
internally, showcased the company’s Business Excellence Model, with
thousands of small projects annually contributing to improvement. The
company expects it will lift gross margins back towards its target of 65%,
which has been achieved previously. A ‘symposium’ style discussion with
a number of clinicians demonstrated it has a remaining long runway
for adoption of its Optiflow nasal high flow therapy in hospitals in the
US, in multiple areas of the hospital. This included citing superior patient
outcomes, a reduced need to escalate patients to intensive care, and
reducing healthcare costs. Overall, the event re-emphasised the high
quality of the FPH business and long-term growth trajectory it is on.
Weakness in FPH’s share price during the quarter (−12%) was partly due
to growing hype around an emerging class of weight loss drugs that could
revolutionise the treatment of obesity. For FPH the specific concern is that
reduced obesity rates would reduce the longer-term growth potential for its
obstructive sleep apnea (OSA) masks business, which is the smaller part of
the group behind Optiflow. We remain positive on the growth outlook for
FPH's OSA business. OSA remains a large and underpenetrated market
today, with diagnosis rates thought to be less than 20%. Obesity rates
have been increasingly globally, for instance the 42% of US adults who
are obese is expected to grow to 49% by 2030. Many patients will not
see enough improvement in their condition through weight loss drugs alone
to avoid using an OSA mask. These factors will likely see the addressable
market continue to grow at healthy rates after factoring in an impact from
weight loss drugs. We also expect that the FPH team can continue to grow
its share in masks from a relatively low base.
Cinema software business Vista (−17%) reiterated the ongoing recovery
of the cinema industry it is witnessing. There was also an emphasis that
industry participants will continue to modernise their software technology,
with two industry perspectives adding some context. The company
reiterated its 2025 aspirations and provided some new detail to illustrate
the progress towards these targets. While the company remains confident
of its targets, it is clear investors are wanting to see more evidence to build
confidence in its execution, hence the softer share price. Management
will need to demonstrate progress in the form of ‘runs on the board’ to see
investor confidence match its own.
1
Share price discount 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 2023 – 30 September 2023
as at 30 September 2023
Matt Peek
Portfolio Manager
Fisher Funds Management Limited
13 October 2023
1
KFL NAV
$
1. 3 0
$
1. 2 6
Share Price
DISCOUNT
1
2 .1
%

Warrant Price
$
0.0 3

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(3.2%)+0.1%+7.9%
Adjusted NAV Return(5.1%)+0.4%+6.2%
Portfolio Performance
Gross Performance Return (4.9%)+1.7%+8.2%
S&P/NZX50G Index(5.2%)(1.3%)+3.9%

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 kingfish.co.nz/about-kingfish/kingfish-policies.
LISTED COMPANIES% Holding
Auckland Intl Airport8.6%
Contact Energy7.2%
Delegat Group2.3%
EBOS Group4.7%
Fisher & Paykel Healthcare14.6%
Freightways3.1%
Infratil17.6%
Mainfreight15.0%
Meridian Energy2.0%
Port of Tauranga2.6%
Ryman Healthcare4.5%
Summerset7.9%
The a2 Milk Company3.1%
Vista Group International3.4%
Vulcan Steel1.1%
Equity Total97.7%
New Zealand dollar cash2.3%
TOTAL100.0%
PORTFOLIO HOLDINGS SUMMARY
as at 30 September 2023
COMPANY NEWS
Dividend Paid 22 September 2023
A dividend of 2.79 cents per share was paid to Kingfish shareholders on 22 September 2023 under the quarterly distribution policy. Interest in
Kingfish’s dividend reinvestment plan (DRP) remains high with 40% 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 2023
Kingfish Limited
Private Bag 93502, Takapuna, Auckland 0740, New Zealand
Phone: +64 9 489 7094
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
SUMMERSET
+8
%
MAINFREIGHT
−8
%
FISHER & PAYKEL
HEALTHCARE
−12
%
THE A2 MILK
COMPANY
−15
%
VISTA
GROUP
−17
%
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: 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.