BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — Investor Presentation (November 2013)
26 slides from BKI Investment's investor presentation, Nov 25, 2013
Slide 1: BKI Investment Company Limited
BKI INVESTMENT COMPANY LIMITED
Slide 2: Disclaimer
For personal use only Disclaimer This material has been prepared by BKI Investment Company Limited. The information within this document is not intended to provide advice to investors or take into account an individual’s financial circumstances or investment objectives. This is general investment ad
Slide 3: 12 Months ago…
12 Months ago… For personal use only Uncertainty surrounding global economies led to low levels of investor confidence. Stock valuations were very attractive and dividend yields were at historical highs. Weak Global Economies Low Investor Confidence Attractive Stock Valuations High Dividend Yields 3
Slide 4: 12 Months ago…
12 Months ago… For personal use only A great opportunity for the long term investor who could block out the noise, focus on bottom up stock selection and basic investment fundamentals. Opportunity Equities Safety Interest –Tax Tax Defensive Reaction V’s Security of Cash Dividends + Franking Fi d Fix
Slide 5: Where are we now…
Where are we now… For personal use only Have global H l b l economies i stabilised, t bili d should h ld we expectt another th market k t correction? ti ? OOr ddo we have a positive backdrop to invest against? Are valuations stretched stretched, are stocks overvalued overvalued, are we paying up for
Slide 6: Domestic & Global Economies
For personal use only Domestic & Global Economies Improvements in the Eurozone have been encouraging, although these have been modest and from country to country somewhat unbalanced . Consensus growth rates are forecast at 1.3% for FY2014. UK growth prospects are sound, supported by stronger busines
Slide 7: Domestic & Global Economies
For personal use only Domestic & Global Economies Emerging Markets have continued their positive growth trajectory. In particular the Chinese economy which is expected to grow between 7.5% 7 5% - 8.0% 8 0% in FY2014 FY2014. As a result of aggressive gg stimulus incentives, Japan p is expected p to r
Slide 8: Domestic & Global Economies: Global Growth Outlook
For personal use only Domestic & Global Economies Global Growth Outlook Developed Markets V’s Emerging Markets Source: Credit Suisse Emerging Markets Quarterly - Page 7, Thomson Reuters DataStream, Haver Analytics®, 8
Slide 9: Investor Confidence
For personal use only Investor Confidence Ex-resources and mining investment, the confidence of the local investor has grown considerably over the last 12 months. months Change of Government has helped momentum build into Christmas. Interest rates at 2.50% should ultimately lead to: • Reduced levels
Slide 10: Stock Valuations
For personal use only Stock Valuations Industrial stocks and major resources saw a significant re-rating post the July/Sept y p reporting p g season. FY2014 EPS forecasts for the industrial sector lifted by 17.0%. Upgrades to better quality companies were based on: • Continued cost savings • Balance
Slide 11: Stock Valuations
For personal use only Stock Valuations Resource sector trading at 11.6x. A 19% discount to the 20-year average of 14.3x. Resources continue to be cyclical; lower margins leading to: • Closure Cl off some producing d i mines i andd many exploration l ti projects j t • Mining techniques and technology
Slide 12: Stock Valuations
For personal use only Stock Valuations On a Historical PE valuation, Australian equity markets have constantly traded in line with the US and at a premium to the UK and European markets. markets 19 gs ratio (X) 17 15 13 Price to earning 11 9 7 5 2004 2006 2008 2010 2012 2014 Australia US Euro UK Sou
Slide 13: Stock Valuations
For personal use only Stock Valuations Opportunities for Australian companies to benefit from the continual growth of the Emerging Markets: Major Resources – WPL up 21.2%*, RIO up 19.0%*, BHP up 17.9%* Agriculture g – WCB upp 154.1%*, BGA upp 145.6%*, TGR upp 138.5%* Impact on Australia, population
Slide 14: Dividend Yields
For personal use only Dividend Yields The Australian equity market is offering an attractive dividend yield above global peers. 8% 7% 6% 5% 4% 3% 2% 1% 2004 2006 2008 2010 2012 2014 Australia US Euro UK Source: Credit Suisse, as at 31 October 2013. 14
Slide 15: Dividend Yields
For personal use only Dividend Yields Australian equity market offering Dividend Yields at the 10 Year Historical average. average Financial strength, g abilityy to return surplus p funds to shareholders. Special p Dividend distributions from NHC, SUN, CCL, MLT, WBC. Franking Credits - 30% tax rate
Slide 16: Dividend Yields
For personal use only Dividend Yields Dividends + Franking Credits received from a $10,000 investment in BKI at inception V’s Bank Quarterly Interest. Highlights the benefit of receiving a fully franked dividend in a falling interest rate environment. 1,400 1,200 Australian Dollars s 1,000 800 600 4
Slide 17: Where are we now…
Where are we now… For personal use only • Global Gl b l economiesi have h stabilised t bili d • Investor confidence continues to grow • Re rating of the better quality companies Re-rating • Investing for income with growth possibilities Domestic & Global Economies Investor Confidence Stock Valuation
Slide 18: BKI Investment Company Limited
BKI INVESTMENT COMPANY LIMITED
Slide 19: BKI Portfolio – Top 25 Investments (1-10)
BKI Portfolio P tf li – Top T 25 For personal use only As at 31 October 2013 BKI - Top 25 Investments % of Total Index Portfolio Weight 1 NAB National Australia Bank 9.1% 5.8% 2 CBA Commonwealth Bank 8.9% 8.5% 3 WBC Westpac Banking Corp 7.3% 7.4% 4 NHC New Hope Corporation 6.4% 0.0% 5 BHP BHP Billit
Slide 20: BKI Portfolio – Top 25 Investments (11-20)
BKI Portfolio P tf li – Top T 25 For personal use only As at 31 October 2013 BKI - Top 25 Investments % of Total Index Portfolio Weight 11 ALQ ALS Limited 2.3% 0.3% 12 AGK AGL Energy gy Limited 2.2% 0.6% 13 WPL Woodside Petroleum Limited 1.9% 2.2% 14 IAG Insurance Australia Group 1.5% 0.9% 15 IVC In
Slide 21: BKI Portfolio – Top 25 Investments (21-25)
BKI Portfolio P tf li – Top T 25 For personal use only As at 31 October 2013 BKI - Top 25 Investments % of Total Index Portfolio Weight 21 MLT Milton Corporation 1.0% 0.0% 22 BOQ Bank of Queensland 1.0% 0.3% 23 PPT Perpetual Limited 1.0% 0.1% 24 ASX ASX limited 0.9% 0.5% 25 RHC Ramsay Healthcare 0 8
Slide 22: BKI Investment Company Limited
BKI INVESTMENT COMPANY LIMITED
Slide 23: BKI's 10th Annual General Meeting
BKI’ 10th Annual BKI’s A lGGenerall Meeting M ti For personal use only ¾ BKI Shareholders have grown from 7,832 in FY2004 to 12,350*. ¾ Portfolio Valuation has increased by 358%, from $171m to $784m*. ¾ In 8 yyears Ordinaryy Dividends ppaid to shareholders have increased byy 55%. ¾ BKI has paid 5 Sp
Slide 24: BKI Portfolio Valuation
BKI P Portfolio tf li VValuation l ti For personal use only BKI successfully raised $107m at $1.48 per share through a Placement and a 1 for 15 Entitlement Offer. The BKI Portfolio Valuation including cash and receivables was $864m as at 31 October 2013. 1,000 900 800 700 ($ millions) 600 500 400 30
Slide 25: Total Shareholder Returns
T t l Shareholder Total Sh h ld Returns R t For personal use only As at 31 October 2013 30.0% 26.8% Total Shareholder Returns exclude the 24.8% benefit of franking credits being passed on 25.0% from BKI to Shareholders. 20.0% 14.3% 15.0% 12.0% 11.0% 10.2% 9.6% 10 0% 10.0% 8 6% 8.6% 6.5% 4.4% 5.0% 0.
Slide 26: 1st Quarter FY2014 Update
1st Quarter Q t FY2014 U Update* d t * For personal use only Revenue – Revenue from the Investment Portfolio (excluding Special Dividend Income) is up approx 9% on the previous corresponding period.* Net Operating Result – Net Operating Result (excluding Special Dividend Income) is up approx 10% on
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