BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — Investor Presentation (November 2011)
30 slides from BKI Investment's investor presentation, Nov 28, 2011
Slide 1: Presentation to Shareholders
For personal use only Presentation to Shareholders November 2011 1
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: Agenda
Agenda For personal use only BKI Update Solid Background Delivering Performance Macro Snapshot Domestic V’s International Valuation V’s Income Taking Advantage Investing for the Future BKI Update Focus on Value and Yield 3
Slide 4: BKI Update: Solid Background Delivering Performance
For personal use only BKI Update Solid Background Delivering Performance 4
Slide 5: Directors and Management
Directors and Management For personal use only Robert Millner Chairman of the Board Chairman of the Investment Committee David Hall Independent Non-Executive Director Alex Payne Non-Executive Director Investment Committee Ian Huntley Independent Non-Executive Director Investment Committee Tom Millne
Slide 6: Fund Manager of the Year Awards
Fund Manager of the Year Awards For personal use only BKI awarded “2011 Listed Investment Company of the Year”. The award is a great endorsement of an LIC whose major focus is to invest in quality companies, enabling it to generate a growing dividend stream and capital growth. Exciting future for th
Slide 7: Dividends Paid
Dividends Paid For personal use only 7.0 1 6.0 1 1 5.0 4.0 3.0 6 6 6 5 5.3 5.25 2.0 4.3 1.0 2 0.0 cps cps cps cps cps cps cps cps 2004 2005 2006 2007 2008 2009 2010 2011 Ordinary Dividends Special Dividends 7
Slide 8: Management Expense Ratio
Management Expense Ratio For personal use only 0.80% 0.69% 0.71% 0.70% 0.60% 0.56% 0.50% 0.46% 0.46% 0.40% 0.31% 0.30% 0.19% 0.20% 0.18% 0.10% 2004 2005 2006 2007 2008 2009 2010 2011 8
Slide 9: BKI Performance
BKI Performance as at 31 October 2011 For personal use only BKI Performance 6 Mths 1 Year 3 Years 5 Years 7 Years as at 31 October 2011 (pa) (pa) (pa) S&P/ASX 300 ACC INDEX (XKOAI) -9.0% -3.9% 7.1% -0.2% 6.3% BKI Portfolio Returns are BKI Total Shareholder Returns 1.9% 6.5% 7.9% 2.1% 8.0% measured a
Slide 10: Macro Snapshot
For personal use only Macro Snapshot Domestic V’s International Valuation V’s Income 10
Slide 11: Market Commentary
Market Commentary For personal use only Low Investor Confidence • Domestic Inappropriate interest rates Uncertainty on the future cost of living Pressure on household affordability Negativity surrounding weak global economies Unstable federal government • International High unemployment Financial in
Slide 12: Market Commentary
Market Commentary For personal use only Investor’s Defensive Reaction • Domestic Changed risk appetite to investing in shares Increased household savings …Leading to a reduced exposure to Australian shares • InternationalHigh Australian Dollar Unfavorable federal government policies; Carbon Tax Mini
Slide 13: Valuation – PE Ratios
Valuation – PE Ratios For personal use only Historical PE Multiples (X) 25 23 21 19 17 15 13 11 9 7 5 2001 2003 2005 2007 2009 2011 2013 Australia US Euro UK Source: Credit Suisse 13
Slide 14: Valuation – PE Ratios
Valuation – PE Ratios For personal use only Australian Market – Historical PE (X) 18 17 16 15 14 13 12 11 10 9 8 2001 2003 2005 2007 2009 2011 2013 Australian Market 12-month Forward PE Average +/- 1 S.D. 14 Source: Credit Suisse
Slide 15: Income – Dividend Yields
Income – Dividend Yields For personal use only 10 year Historical Dividend Yields (%), Aust, US, Euro and UK 7% 6% 5% 4% 3% 2% 1% 0% 2001 2003 2005 2007 2009 2011 2013 Australia US Euro UK 15 Source: Credit Suisse
Slide 16: Income – Dividend Yields
Income – Dividend Yields For personal use only Australian Market – Historical Dividend Yield (%) 7% 6% 5% 4% 3% 2% 2001 2003 2005 2007 2009 2011 2013 Australian Market Dividend Yield Average +/- 1 S.D. Source: Credit Suisse 16
Slide 17: Taking Advantage: Investing for the Future
For personal use only Taking Advantage Investing for the Future 17
Slide 18: Investment Opportunity
Investment Opportunity For personal use only • Long term investor’s need to act upon these opportunities. • BKI has been investing through many cycles. • Balance sheets of quality companies appear more robust than ever. • Dividend distributions have continued to improve. • BKI remain cautious of com
Slide 19: Stock Selection Criteria
Stock Selection Criteria For personal use only 1 Income - Dividend Yields, Franking, Pay Out Ratios. 2 Principal Activity - Sustainable Business Model, Competitive Advantage. 3 Debt Levels - Gearing Ratios, Net Interest Coverage. 4 Management and Board - Ownership, Board Meeting Attendance, History
Slide 20: Portfolio Movements: Major Investments
Portfolio Movements Since 30 June 2011 For personal use only Major Investments FY12 Forecast FY12 Forecast FY12 Forecast Dividend Yield (%) EPS Growth (%) PE Multiple (X) Wespac Banking Corp 7.7 2.7 9.9 National Australia Bank 7.2 8.5 8.7 Fleetwood Corporation 6.9 0.6 12.3 Wesfarmers Limited 5.6 22.
Slide 21: Portfolio Movements: Major Divestments
Portfolio Movements Since 30 June 2011 For personal use only Major Divestments FY11 Actual FY11 Actual FY11 Actual Dividend Yield (%) EPS Growth (%) PE Multiple (X) Bluescope Steel 2.9 -204 -10.7 Echo Entertainment 0 n.a 22.6 Westpac Pref Shares(WBCPA) 5.0 0 n.a Orica Pref Shares (ORIPB) 6.4 0 n.a 2
Slide 22: Diversification: Top Investments
Diversification Top 20 Investments For personal use only As at 31 October 2011 1 New Hope Corporation 11 ANZ Banking Group 2 BHP Billiton Limited 12 Woodside Petroleum 3 National Australia Bank 13 QBE Insurance Group 4 Commonwealth Bank 14 Coca Cola Amatil Limited 5 Westpac Banking Corp 15 Metcash L
Slide 23: Diversification: Sector Weightings
Diversification Sector Weightings For personal use only Financials 31.6% Energy 15.9% Materials 11.9% Consumer Staples 10.4% Industrials 7.3% Cash 6.4% Telecommunications 4.6% Consumer Discretionary 4.5% Utilities 3.5% Preference Shares 2.8% Healthcare 0.9% Property Trusts 0.3% 23
Slide 24: Diversification: S&P/ASX300 Acc Indices
Diversification S&P/ASX300 Acc Indices For personal use only 12 Month Total Shareholder Returns as at 31 October 2011. Larger portfolio holdings V’s Index returns; diversification delivering performance. CPB 35% NHC 25% 15% CBA NAB WBC WES BKI 5% -5% WOW AGK BHP -15% Financials Consumer S&P/ASX 300
Slide 25: BKI Update: Focus on Yield and Value
For personal use only BKI Update Focus on Yield and Value 25
Slide 26: BKI Update July 2011 – October 2011
BKI Update July 2011 – October 2011 For personal use only BKI announced as the inaugural winner of the “Listed Investment Company of the Year”. Revenues from the Investment Portfolio (excluding Special Dividend Income) is up approx 7% on the previous corresponding period. Operating Profits (excludin
Slide 27: New Hope Corporation
New Hope Corporation For personal use only • Solid FY2011 results: • Despite flood impacts and rail line closures • Realised Net Profits from sale of Arrow Energy of $329m • Achieved record export sales • Plans to double production in next 5 - 7 years • Increased Final Dividend by 11% • Announced 7t
Slide 28: Value
Value For personal use only Opportunity for investment at a 10% discount to the Pre Tax NTA. Ideal for long term passive shareholders and SMSF’s. $1.80 $1.70 30.0% $1.60 $1.50 20.0% $1.40 $1.30 $1.20 10.0% $1.10 $1.00 0.0% $0.90 $0.80 $0.70 -10.0% $0.60 $0.50 -20.0% Prem/Disc % Pre Tax NTA BKI Share
Slide 29: Yield
Yield For personal use only Strong dividend payout ability with abundant franking credits. Historical grossed up dividend yield was 8.1% as at 31 October 2011. 9.0% 7.0% 5.0% 3.0% 1.0% BKI Grossed Up Dividend Yield 90 Day Bank Bill 29
Slide 30: For personal use only
For personal use only Office Level 2, 160 Pitt Street Sydney NSW 2000 Telephone +61 2 9210 7000 Fax +61 2 9210 7099 Web www.bkilimited.com.au ABN 23 106 719 868 30
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