BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — Investor Presentation (March 2012)
28 slides from BKI Investment's investor presentation, Mar 15, 2012
Slide 1: Presentation to Shareholders
Presentation to Shareholders March 2012
Slide 2: Disclaimer
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 advice only and does not
Slide 3: Agenda
Agenda 1. BKI Background - Group Profile, Investment Strategy, History, Directors and Management 2. 1H 2012 Results - Highlights, Dividends, MER, Performance 3. Macro Snapshot - Investor Confidence, Valuations, Yields 4. Taking Advantage - Investment Opportunity, Diversification, Value, Income, Port
Slide 4: BKI Background
3(¢/ BKI INVESTMENT COMPANY LIMITED BKI Background
Slide 5: Group Profile and Investment Strategy
Group Profile and Investment Strategy BKI’s investment portfolio has been built on a philosophy of long term investment with a focus on Australian equities. BKI primarily seeks to invest in well-managed businesses with a profitable history and with the expectation of sound dividend and distributio
Slide 6: History
History 1980’s Brickworks Limited (BKW) Establishes Share Portfolio 2003 Acquires BKW’s Share Portfolio – BKI lists on the ASX 2004 Merges with Pacific Strategic Investments (Mkt Cap ~$26m) 2007 Renounceable Rights Issue raises $57.0m Placement raises $49.3m 2008 Becomes internally managed
Slide 7: Washington H. Soul Pattinson
Washington H. Soul Pattinson In 2009 WHSP increased their shareholding in BKI to become the largest shareholder (currently holding 13.7% of BKI shares). Listed in 1903, WHSP is the second oldest listed company on the ASX and holds investments worth in excess of $4.6bln. As an investment group WHSP h
Slide 8: Directors and Management
Directors and Management Name Position Special Responsibilities Mr Robert Millner Non-Executive Director and Investment Committee Chairman Remuneration Committee Mr David Hall Independent Non-Executive Chairman Audit Committee Director Remuneration Committee Mr Alex Payne Non-Executive Director Chai
Slide 9: Fund Manager of the Year Awards
Fund Manager of the Year Awards 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 the LIC sector.
Slide 10: 1H 2012 Results
3(¢/ BKI INVESTMENT COMPANY LIMITED 1H 2012 Results
Slide 11: BKI Result Highlights
BKI Result Highlights 1H 2012 1H 2011 Growth Ordinary Dividend Income $14.34m $12.46m 12.4% Net Operating Result $14.16m $12.81m 10.5% Net Operating Profit $16.42m $15.60m 5.2% Earnings Per Share 3.33cps 3.03cps 9.3% Dividend Per Share 3.20cps 3.00cps 6.7% 11
Slide 12: Dividends Paid
Dividends Paid 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 3.2 1.0 2 0.0 cps cps cps cps cps cps cps cps cps 2004 2005 2006 2007 2008 2009 2010 2011 2012 Ordinary Dividends Special Dividends 12
Slide 13: Management Expense Ratio
Management Expense Ratio 0.80% 0.69% 0.71% 0.70% 0.56% 0.60% 0.46% 0.46% 0.50% 0.40% 0.31% 0.30% 0.19% 0.18% 0.18% 0.20% 0.10% 2004 2005 2006 2007 2008 2009 2010 2011 1H 2012 13
Slide 14: BKI Performance
BKI Performance as at 29 February 2012 BKI Performance 6 Mths 1 Year 3 Years 5 Years 7 Years as at 29 February 2012 (pa) (pa) (pa) S&P/ASX 300 ACC INDEX (XKOAI) 2.6% -6.8% 13.8% -1.7% 4.9% BKI Portfolio Returns are BKI Total Shareholder Returns 8.7% 2.1% 17.6% 1.8% 5.7% measured after BKI Share Pric
Slide 15: Macro Snapshot
3(¢/ BKI INVESTMENT COMPANY LIMITED Macro Snapshot
Slide 16: Low Investor Confidence
Low Investor Confidence Inappropriate cash rates Global funding pressures affecting variable mortgage rates Uncertainty on the future cost of living and household affordability House price decline Commodity price decline Negativity surrounding weak global economies Unstable federal gov
Slide 17: Investors’ Defensive Reaction
Investors’ Defensive Reaction Domestic Changed risk appetite to investing in Australian shares Record consumer savings Hybrid issues putting pressure on ordinary shares International High Australian Dollar Unfavorable federal government policies; Carbon Tax Mining Resources Rent Tax …Leadi
Slide 18: Valuation – PE Ratios
Valuation – PE Ratios 25 Australia US Euro UK 20 Historical PE Multiples (X) - Global Markets 15 10 5 2001 2003 2005 2007 2009 2011 2013 18 15 12 Australian Historical 9 PE Ratios (X) Australia Average 6 2001 2003 2005 2007 2009 2011 2013 Source: Credit Suisse 18
Slide 19: Income – Dividend Yields
Income – Dividend Yields 7% 6% 5% Historical Dividend Yields (%) 4% - Global Markets 3% 2% 1% Australia US Euro UK 0% 2001 2003 2005 2007 2009 2011 2013 7% 6% Australia Average 5% Australian Historical 4% Dividend Yield (%) 3% 2% 2001 2003 2005 2007 2009 2011 2013 Source: Credit Suisse 19
Slide 20: Taking Advantage
3(¢/ BKI INVESTMENT COMPANY LIMITED Taking Advantage
Slide 21: Investment Opportunity
Investment Opportunity Balance sheets of quality companies are robust and dividend distributions have continued to improve. Cautious of companies exposed to: Retail, Media and Manufacturing Focused on our Stock Selection Criteria: 1. Income Dividend Yields, Franking, Pay Out Ratios. 2. Princip
Slide 22: 1H 2012 Portfolio Movements
1H 2012 Portfolio Movements FY 2012 Industry FY 2012 FY 2012 Board and FY 2012 FY 2012 Major Investments Dividend Group Gearing Interest Management PE Multiple EPS Growth Yield (Sub-Sector) (%) Cover (X) Ownership (X) (%) 1. Westpac Bank 8.1% Banks n/a n/a ~$36.1m 10.0 -3.3 2. National Aust Bank 7.4
Slide 23: 1H 2012 Portfolio Movements
1H 2012 Portfolio Movements FY 2012 Industry FY 2012 FY 2012 Board and FY 2012 FY 2012 Divestments Dividend Group Gearing Interest Management PE Multiple EPS Growth Yield (Sub-Sector) (%) Cover (X) Ownership (X) (%) 1. BlueScope Steel 0% Materials 15.4 1.6 ~$2.6m -8.0 23.1 Consumer 2. Echo Entertain
Slide 24: Diversification
Diversification Top 20 Investments - As at 29 February 2012 1 New Hope Corporation 14.3% 11 ANZ Banking Group 2.5% 2 BHP Billiton Limited 8.4% 12 Woodside Petroleum 2.5% 3 Commonwealth Bank 7.9% 13 Metcash Limited 1.9% 4 National Australia Bank 7.7% 14 Coca Cola Amatil 1.7% 5 Westpac Banking Corp 5.
Slide 25: Diversification
Diversification S&P/ASX300 Acc Indices 12 Month Total Shareholder Returns as at 29 February 2012. Larger portfolio holdings V’s Index returns; diversification delivering performance. 40% CPB 30% TLS NHC 20% 10% BKI 0% WOW CBA NAB WES WBC -10% WPL BHP -20% Telco Consumer Industrials Financials S&P/AS
Slide 26: Value
Value After adjusting BKI’s closing share price as at 29 February 2012 for the Ordinary Interim Dividend of 3.2cps, BKI is currently trading at a 12% discount to the Pre Tax NTA. $1.70 $1.60 30.0% $1.50 $1.40 20.0% $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/D
Slide 27: Income
Income Rates offered by banks and other financial institutions will negatively impact the level of income received by some investors. BKI believe that the lower levels of income received from cash and other fixed interest products could be a catalyst for retail investors to search for income within
Slide 28: Low Cost Low Risk High Yield…
Low Cost Office Level 2, 160 Pitt Street Low Risk Sydney NSW 2000 Telephone +61 2 9210 7000 Fax +61 2 9210 7099 Web www.bkilimited.com.au ABN 23 106 719 868 High Yield… …all through BKI.ASX www.bkilimited.com.au
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