Slightly below expectations. 1H13 results are slightly below expectations with revenue of SGD122.4m (+ 3.9% YoY), and net profit of SGD7.6m (+5.1% YoY), attributed mainly to corporate and retail interiors and the alternative marketing division. Alternative Marketing division grew by 55% in 1H13 driven by major works such as Chanel Event at Loewen Cluster. In 2H13, major catalysts depend on further contract wins from exhibitions and Shanghai Disneyland. We adjust our forecasts minimally and maintain Buy with TP raised to SGD1.02, as we roll over to FY14F P/E of 10.5x.

Indirect proxy to retail malls. Kingsmen is a proxy play to the asset enhancement initiatives and construction of new malls in Singapore, as demonstrated in its interior fit-out earnings. Singapore accounts for over 90% of interior fit-out sales (53% of total sales). With >2m sq ft of retail malls expected to be completed or refurbished in both 2013 and 2014, we expect the interior fit-out segment to continue to outperform this year. Since 2004, interior sales have risen by five fold, and pre-tax margins have expanded from 2.6% to 9.4% in FY12.

Take a slice out of Disneyland’s budget. According to online media sources, foundation works for Shanghai Disneyland have started this year. Kingsmen’s peer Pico Far East has announced a contract win of HK$360m (SGD59m), which has commenced in 1H13. Kingsmen is close behind having secured over SGD40m worth of contracts from Disneyland Shanghai. Kingsmen expects more parcels will be up for grabs in 2H13, which they will continue to bid on. Kingsmen has also renewed a 5-year contract for F1 until 2017 to create corporate suites, hospitality and team suites. Current orderbook stands at a record of SGD294m, of which SGD232m will be recognised in 2013. (Up from SGD235m in 1H12.)

Good for the long haul, BUY. An interim dividend of 1.5cts has been declared. While Kingsmen is trading above its historical mean, the consistent earnings and orderbook buildup is a clear indication of a well-deserved rerating. BUY.

Source: Maybank Kim Eng Research - 15 Aug 2013