BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — H1 2019 Earnings Presentation
26 slides from BKI Investment's earnings presentation, Jan 23, 2019
Slide 1: Results for the Six Months Ended 31 December 2018
BKI INVESTMENT COMPANY LIMITED For personal use only RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018 BKI is managed by Contact Asset Management AFSL 494045
Slide 2: Disclaimer
DISCLAIMER For personal use only This material has been prepared by Contact Asset Management on behalf of 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 obj
Slide 3: Result Highlights
RESULT HIGHLIGHTS Result Excluding Special Dividends 1H 2019 1H 2018 Growth For personal use only Income from Operating Activities $28.0m $24.6m 14% Net Operating Result $25.5m $22.7m 12% Earnings Per Share 3.510cps 3.660cps -4% Interim Dividend Per Share 3.625cps 3.625cps In Line Result Including S
Slide 4: Result Highlights
RESULT HIGHLIGHTS For personal use only Income from Operating Activities Net Operating Profit Earnings Per Share $28.0m $47.1m 6.48 cents 14% 104% 74% from 1H2018 from 1H2018 from 1H2018 Fully Franked Fully Franked Current Grossed Up Interim Dividend Special Dividend Dividend Yield# 3.625cps 1.50cps
Slide 5: BKI Year Review
BKI 15 YEAR REVIEW For personal use only Liquidity Size & Scale Dividend History* BKI’s Total Assets have BKI has paid out approx. $600m BKI’s shareholder base has increased from $171m upon or 97.55cps in Dividends & grown from 7,832 in 2003 listing to $1,117m in December Franking Credits to to 17,5
Slide 6: Net Operating Profits
NET OPERATING PROFITS For personal use only Net Operating Result before special dividend revenue increased from $22.7m to $25.5m. Net Profit Attributable to Shareholders increased 104% to $47.1m. Results were mainly driven by higher dividends received from: • New Hope Corporation • AGL Energy • Wood
Slide 7: A Possible Change in Franking Credit Policy
A POSSIBLE CHANGE IN FRANKING CREDIT POLICY For personal use only In recent months we have been overwhelmed by BKI Special Dividends Paid to Shareholders the level of angst in the investment community regarding Labor’s proposal to eliminate cash refunds 1.50 of excess franking credits. In response t
Slide 8: Dividend History of BKI
DIVIDEND HISTORY OF BKI For personal use only BKI Dividends Paid to Shareholders A fully franked Interim Dividend of 3.625cps has been declared. 6.00 5.00 A fully franked Special Dividend of 1.50cps has also Cents Per Share been declared. 4.00 3.00 BKI’s fully franked dividend yield is currently 5.7
Slide 9: Interim Dividend Key Dates
INTERIM DIVIDEND KEY DATES For personal use only The last trading day to be eligible for BKI’s Interim and Special Dividend is Thursday 7th February 2019. The last day to nominate for participation in the Dividend Reinvestment Plan (DRP) is Tuesday 12th February 2019. Key dates for the Dividends are
Slide 10: Income Generation
INCOME GENERATION For personal use only Dividends + Franking Credits received from a Long Term Dividend Income $10,000 investment in BKI at IPO versus Bank Quarterly Interest. $3,000 $2,438 $2,500 An investor who spent the equivalent of $2,000 $10,000 to purchase BKI shares upon listing in $1,500 De
Slide 11: BKI Performance Since Listing
BKI PERFORMANCE SINCE LISTING For personal use only Cumulative Value (Total Shareholder Returns) Since listing in 2003 BKI’s investment $5.00 strategy has been, and will continue to be, $4.50 $ 4.05 focused on research driven, active equities $4.00 management, investing for the long term, $3.50 in p
Slide 12: Total Shareholder Returns
TOTAL SHAREHOLDER RETURNS For personal use only Total Shareholder Returns BKI’s Total Shareholder Return, including 15.0% franking credits, for the year ended 31 12.2% 10.7% 9.9% 9.8% December 2018 was negative 6.9%. 10.0% 8.2% 7.1% 5.7% 5.0% BKI’s Net Portfolio Return (after all operating 2.9% expe
Slide 13: Positioning BKI for the Future
POSITIONING BKI FOR THE FUTURE For personal use only ACTIVELY MANAGED PORTFOLIO FOR AN ATTRACTIVE FEE BKI is managed by Contact Asset Management AFSL 494045
Slide 14: BKI Premium/Discount
BKI PREMIUM/DISCOUNT For personal use only Discount to NTA represents a good investment opportunity $1.90 $1.80 40% $1.70 $1.60 30% $1.50 $1.40 20% $1.30 $1.20 10% $1.10 $1.00 0% $0.90 $0.80 -10% $0.70 $0.60 -20% Prem/Disc % Pre Tax NTA BKI Share Price 14 Source: BKI, Contact Asset Management, Bloom
Slide 15: Dealing with the Noise
DEALING WITH THE NOISE For personal use only There are a number of interesting dynamics dominating our conversations. Headwinds are emerging and the global economy has enjoyed a sustained period of above average growth. The issues front of mind for most investors are: 1. Direction of interest rates
Slide 16: Investment Cycle
INVESTMENT CYCLE For personal use only We appear to have rolled off the top of the cycle: • Falling share prices – especially high growth stocks • Falling Commodity prices – especially oil Equities Panic • Tighter Credit conditions – especially residential loans Capital Growth S&P/ASX 300 Yield Prot
Slide 17: Population Growth
POPULATION GROWTH Australia’s population is now expected to grow to 40 million people as early as 2048 For personal use only 17 Source: Macrobusiness, ABS
Slide 18: Infrastructure Growth
INFRASTRUCTURE GROWTH For personal use only Infrastructure spend is currently at levels never seen before and will continue for many years. 18 Source: Macromonitor, Australian Construction Outlook, Value of Work Done by Year. Boral Limited FY2018 Results presentation, Slide 48.
Slide 19: Funds Growth
FUNDS GROWTH For personal use only The growth in superannuation assets in Australia is going to be substantial. 19 Source: Challenger 31 December 2017 Investor Presentation
Slide 20: BKI Investment Process
BKI INVESTMENT PROCESS For personal use only BKI is focused on investing in stocks using the 5 fundamentals below as part of the stock selection process: 1 Income Dividend Yields, Franking Credits, Pay Out Ratios 2 Principal Activity Sustainable Business Model, Competitive Advantage, Barriers to Ent
Slide 21: Portfolio Positioning
PORTFOLIO POSITIONING For personal use only Investment Portfolio increases in holdings 1. BHP Limited 2. Woodside Petroleum 3. Transurban Group 4. Commonwealth Bank 5. Ramsay Healthcare 6. Woolworths Limited 7. AGL Energy Limited 8. APA Group 9. Regis Healthcare 10. Macquarie Group 11. IAG Limited 1
Slide 22: Portfolio Positioning
PORTFOLIO POSITIONING For personal use only New Portfolio Positions 1. Coles Group 2. Platinum Asset Management 3. Magellan Financial Group 4. Stockland Group 5. Pact Group Investment Portfolio Sales 1. Flight Centre 2. IOOF Holdings 3. Perpetual Limited 22
Slide 23: Top Investments
TOP 25 INVESTMENTS For personal use only As at 31 December 2018 Stock % of Total Portfolio Stock % of Total Portfolio 1 Commonwealth Bank 6.6% 14 AGL Energy Limited 2.8% 2 National Australia Bank 6.1% 15 Woodside Petroleum 2.5% 3 Westpac Banking Group 5.3% 16 Telstra Corporation 2.4% 4 New Hope Corp
Slide 24: Portfolio Positioning
PORTFOLIO POSITIONING As at 31 December 2018 For personal use only Financials 14% Banks Industrials 22% 10% Bank Hybrids 1% Cash Real Estate 9% 2% Health Care 5% Energy Consumer Staples 7% 5% Consumer Discretionary Utilities Materials Telecommunication Services 7% 7% 6% 5% 24
Slide 25: Upcoming Reporting Season
UPCOMING REPORTING SEASON For personal use only Main topics of interest: • Dividend Yield A company’s ability to deliver a sustainable and growing dividend stream. • Franking Credits Current balance and Capital Management. • Reduced Costs Management’s ongoing ability to control costs. • Balance Shee
Slide 26: BKI Fact Sheet
BKI Fact Sheet For personal use only ASX Code BKI.ASX Investment Manager Listing Date December 2003 Contact Asset Management Mandate Australian Listed Equities Level 1 Investment Sectors Diversified 160 Pitt Street Mall Benchmark S&P/ASX 300 Accumulation Index Sydney NSW 2000 Market Cap $1,102m Debt
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