Kingsmen Creatives Turnaround Soon?

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Kingsmen Creatives Ltd reported their revenue increases 10.8% to S$149.4 million for 1st half of 2016 (1H2016). Although revenue has increased, the gross profit still remains in the negative outlook as compared to 1H2015. Gross profit decreased 1.4% as compared to 1H2015.

I am quite keen to understand the performance of the 4 divisions in Kingsmen Creatives Ltd. As you can see below, all the three divisions (Exhibitions and Thematic, Retail and Corporate Interiors, Alternative Marketing) maintained their performance by reporting a revenue increase except for Research and Design which continues to report a revenue decrease. (Results for 1Q2016 here: Kingsmen Creatives Profit Fell for 1Q2016)

Division 1Q2016 vs 1Q2015 1H2016 vs 1H2015
Exhibitions and Thematic Revenue Increase Revenue Increase
Retail and Corporate Interiors Revenue Increase Revenue Increase
Research and Design Revenue Decrease Revenue Decrease
Alternative Marketing Revenue Increase Revenue Increase

What is Research and Design?

Being curious on the job functions in Research and Design, I did some search on the internet. This is what I found.

Kingsmen Design Pte Ltd is a subsidiary of Kingsmen Creatives Pte Ltd. As a part of the Group’s Research & Design division, Kingsmen Design Pte Ltd specialises in design consultancy, design implementation, design management, research & development, and shop drawing support.

The division’s client includes TAG Heuer, Procter & Gamble Co., Kate Spade and Michael Kors, and thematic projects in the region. As you can see these are big brands in luxury retail goods sector which is facing headwinds now. In the current headwinds, these big brands are bound to be investing less in design consultancy and thematic implementation.

From my point of view, there is no point for these big brands to invest in thematic promotions and design the shops when nobody is buying in the current economy right? Most likely, the big brands may be busy stacking their shelves with more products to increase sales instead. But of course, this is just my analysis. What do you think?

Kingsmen Creatives Profit Fell for 1Q2016

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On 12th May 2016, Kingsmen Creatives announced its financial results for 1Q2016. Total revenue for 1Q2016 is S$61.4 million. This is a 18.4% increase as compared to the revenue of S$51.9 million in the previous corresponding financial period ended 31 March 2015 (“1Q 2015”).

Revenue

Revenue for Kingsmen Creatives comes from four main business divisions.

Exhibitions and Museums

The exhibitions and museum division contributed a total revenue of S$28.4 million. This is an increase of 8.8% as compared to S$26.1 million in 1Q2015. The key contributors includes major events and projects such as Art Stage Singapore 2016, Singapore Airshow 2016, Asia Pacific Maritime 2016, Kidzania Singapore, Horse Culture Museum and thematic projects in the region.

Retail and Corporate Interiors

The retail and corporate interiors division are the top contributor to Kingsmen Creatives revenue. The division contributed a total revenue of S$29.1 million. This is an increase of 35.3% as compared to the revenue of S$21.5 million in 1Q2015. Clients for this division includes Tiffany & Co., Christian Dior, Uniqlo, H&M, DFS Venture, LS Travel Retail and Shilla Travel Retail.

Research and Design

The research and design division contributed a total revenue of S$2.6 million. This is a 17.4% decrease as compared to the revenue of S$3.1 in 1Q2015. Clients for this division includes Burberry, Procter & Gamble Co., Kate Spade and Michael Kors, and thematic projects in the region

Alternative Marketing

The alternative marketing division contributed a total revenue of S$1.4 million. This is a 16.4% increase as compared to the revenue of S$1.2 million in 1Q2015. Clients for this division includes Health Promotion Board, DFASS Group, Jurong Health, OCBC and StarHub.

Gross Profit

Although revenue increases, gross profit for 1Q2016 decreased 5.8%  to S$13.4 million compared to S$14.2 million for 1Q 2015. Gross profit margin was lower at 21.8% in 1Q 2016 compared to 27.4% in 1Q 2015 mainly due to lower selling prices registered in the Retail & Corporate Interiors division.