Look out for a Kingsmen Creatives surge in 4Q12

E&M and Interiors divisions to lead rebound.

Here's more from Maybank Kim Eng:

In-line with expectations. 3Q12 results were in-line with expectations. Revenue came in at SGD70.4m (-18% YoY) coupled with softer earnings of SGD3.6m (-19% YoY). This makes up 62.8% of our 9M12 earnings estimates. We are expecting bulk of the earnings be recognized in the fourth quarter as seen in FY11’s 4Q results, where it accounted for 36% of FY11 results . We are positive on Kingsmen's strong orderbook of SGD289m, on the back of strong consumer optimism in Asia.

Lower recognition from Interiors division. Interior division was lowered 30.4% YoY to SGD31.9m in 3Q12, due to lower recognition in projects compared to 3Q11. Non-core segments recorded a healthy 25% growth YoY to SGD5.8m. Gross margin increased 2 ppt to 21.5% in 3Q12 and net margin maintained steady at 5.1%, lowered by 0.1ppt YoY.

Strong orderbook of SGD289m. Kingsmen records a higher orderbook of SGD289m (+25.2% QoQ), of which SGD274m will be recognized this year. Kingsmen successfully delivered works for London Olympics and F1 Singapore in 3Q12.

Expect stronger results from E&M and Interiors. In the final quarter, we are expecting higher sales recognition from interiors division, where fit-outs are needed before the festive season. Museum projects, such as Gardens by the Bay, GuangZhou HengDa Exhibitions Centre and Hong Kong Maritime Museum will also be delivered by end of the year.

We will be monitoring contract wins for amusement parks as a strong earnings booster for the year going forward.

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