BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — H1 FY2020 Earnings Presentation
31 slides from BKI Investment's earnings presentation, Jan 22, 2020
Slide 1: Results for the half year ended 31 December 2019
BKI INVESTMENT COMPANY LIMITED For personal use only Results for the half year ended 31 December 2019 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: Highlights
Highlights For the half year ended 31 December 2019 For personal use only Result excluding special investment revenue 1H 2020 1H 2019 Growth Investment revenue – ordinary $27.0m $26.8m 0.8% Income from operating activities $27.4m $28.0m (2.1%) Net operating profit after tax $24.5m $25.5m (3.8%) Earn
Slide 4: Dividend History
Dividend History BKI’s fully franked dividend yield is currently 4.3%*, while the grossed up yield is 6.2%* For personal use only 10.00 9.00 8.00 7.00 Cents per share 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Interim Divid
Slide 5: Income Generation
Income Generation Long term dividend income For personal use only Income from BKI Dividends An investment of $10,000 to purchase BKI $2,500 shares upon listing in December 2003 $2,373 would now be receiving fully franked $2,000 dividends of $1,661pa. $1,500 The franking credits enhance the income by
Slide 6: Interim Dividend Dates
Interim Dividend Dates Last trading date to be eligible for the BKI FY2020 interim dividend is Thursday 6 February 2020 For personal use only Key Dates Last trading date to be eligible for the dividend Thursday 6 February 2020 Ex-dividend date Friday 7 February 2020 Record date Monday 10 February 20
Slide 7: Performance
Performance For personal use only For the half year ended 31 December 2019 BKI is managed by Contact Asset Management AFSL 494045
Slide 8: Total Shareholder Returns
Total Shareholder Returns As at 31 December 2019 For personal use only BKI’s One Year Total Shareholder Return, including franking credits was 21.4%. BKI’s Net Portfolio Return (after all operating expenses, provision and payment of both income and capital gains tax and the reinvestment of dividends
Slide 9: Contributors to Performance - Sectors
Contributors to Performance - Sectors As at 31 December 2019 For personal use only Attribution Analysis at a Sector Level (2019 Calendar Year) 2.0% 1.7% 1.2% 1.0% 0.7% 0.5% 0.2% 0.0% -0.1% -1.0% -0.7% -1.0% -2.0% -2.2% -3.0% -2.4% -4.0% -3.6% Financials Health Care Utilities Discretionary Consumer R
Slide 10: Contributors to Performance - Stocks
Contributors to Performance - Stocks As at 31 December 2019 For personal use only Top 10 Positive Contributors to Portfolio Performance Top 10 Detractors from Relative Portfolio Performance Not held in BKI portfolio BKI holdings Overweight Underweight Source: BKI, Contact Asset Management, Bloomberg
Slide 11: 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 12: Investment Process
Investment Process Research driven, active management For personal use only Through a research driven, active management approach BKI invests for the long term in profitable, well managed companies that offer a compelling yield and growth opportunities. Principal Activity We invest using the five fu
Slide 13: Reducing Exposure to Banks
Reducing Exposure to Banks Shifting into quality companies with earnings and dividend growth For personal use only BKI’s exposure to the banking sector has been Banks as a % of the BKI Portfolio* reducing over the last few years and is currently 35% 33% 15% of the total BKI Portfolio. 31% 29% 30% 29
Slide 14: Portfolio Positioning
Portfolio Positioning For the half year ended 31 December 2019 For personal use only Investment Increases Investments Sold Investments Reduced Source: BKI, Contact Asset Management. BKI Investment Company Limited 14
Slide 15: Major Overweight/Underweight by Stock
Major Overweight/Underweight by Stock As at 31 December 2019 For personal use only Overweight Positions Underweight Positions Company Active Weight Company Active Weight APA Group 4.2% CSL Limited (6.2%) Macquarie Group 4.0% ANZ Banking Group (1.9%) Transurban Group 2.9% Rio Tinto (1.7%) Sydney Airp
Slide 16: Top Investments
Top 25 Investments As at 31 December 2019 For personal use only Stock % of Total Portfolio Stock % of Total Portfolio 1 Commonwealth Bank 6.7% 14 Westpac Bank 2.6% 2 Macquarie Group 6.4% 15 ASX Limited 2.6% 3 Transurban Group 4.9% 16 New Hope Corporation 2.5% 4 APA Group 4.8% 17 AGL Energy Limited 2
Slide 17: Insights from the Investment Manager
Insights from the Investment Manager For personal use only Markets, themes and looking ahead BKI is managed by Contact Asset Management AFSL 494045
Slide 18: Valuations Have Changed
Valuations Have Changed Lower rates driving P/E expansion For personal use only Falling rates gave +1.4 points to the Australian Equity P/E multiple in FY2019 We believe that lower rates have given another +1.2 points to the Australian Equity P/E multiple in FY2020 ROIC – Cost of Capital Falling Rat
Slide 19: Australian Historical Market Valuations
Australian Historical Market Valuations 10 year average price to earnings multiple is 15.3x For personal use only The forecast S&P/ASX300 PE multiple has increased to 18.9x in FY2020. 18.9x Average 15.3x Source: Contact Asset Management, Factset. BKI Investment Company Limited 19
Slide 20: Cautious of Forward EPS Forecasts
Cautious of Forward EPS Forecasts Very rarely does the market get it right! For personal use only Declining EPS Forecasts – Industrials Declining EPS Forecasts – Banks Source: Contact Asset Management, Macquarie Research, Bloomberg, Factset 20 20 BKI Investment Company Limited 20
Slide 21: Global Exposure: Macquarie
Global Exposure Providing shareholders with global exposure without the large management fees For personal use only Diversification across geography and activity 34% Over the last decade Macquarie has undergone the largest and most successful international expansion by any Australian- Income domicil
Slide 22: Global Exposure: Ramsay Healthcare
Global Exposure Providing shareholders with global exposure without the large management fees For personal use only Major global private hospital operator across 11 countries Ramsay Healthcare operates in regions expected see a strong 45% increase health care spending as a percentage of GDP and Inco
Slide 23: US Growth Opportunities: Reece
US Growth Opportunities For personal use only US market fundamentals to drive future growth The acquisition of Morsco has provided Reece entry into the 48% fragmented US$32 billion plumbing market with solid 52% Income consolidation opportunities. Ageing residential stock and population growth in th
Slide 24: US Growth Opportunities: Brickworks
US Growth Opportunities For personal use only 17% Attractive market with consolidation opportunities Since entering the US market in November 2018 through the acquisition of Glen-Gery, Brickworks’ have acquired Sioux City Income Bricks and Redland Brick establishing a business of significant scale i
Slide 25: US Growth Opportunities: ARB
US Growth Opportunities For personal use only 20% Teaming up with Ford ARB’s export segment is a key growth area. In FY2019 the US was ARB’s second highest growth region benefiting from a shift Income in consumer preference to SUVs and 4x4. SUVs as a percentage of vehicle sales in the US are expecte
Slide 26: The Chinese Consumer: Sydney Airport
The Chinese Consumer Rising middle class driving growth opportunities For personal use only Sydney Airport Inbound Markets Investing for future passenger growth In 2018 Chinese residents made 149.7m foreign trips, up from 10.5m in 2001 1,326%. Over the next 10 years this number is expected to double
Slide 27: The Chinese Consumer: Treasury Wine Estates
The Chinese Consumer Rising middle class driving growth opportunities For personal use only China e-commerce Wine Sales Growth Attractive market for TWE’s strategy and brands China is experiencing growth in wine consumption and premiumisation as consumers shift towards perceiving grape wine as a sym
Slide 28: BKI Overview
BKI Overview For personal use only Benefits of investing in BKI BKI is managed by Contact Asset Management AFSL 494045
Slide 29: Benefits of Investing in BKI
Benefits of Investing in BKI For personal use only Income Focused Low Fee Structure Alignment Predictable, fully franked income Managed for 0.10%, BKI Directors and Portfolio stream. 10 years of stable or no performance fee. Managers are shareholders growing dividends. creating strong alignment of i
Slide 30: Notes
For personal use only Notes 30
Slide 31: Notes
For personal use only Notes 31
BKI Investment Company — H1 FY2020 Earnings Presentation on 6ix