KFL – December 2023 Quarterly Newsletter

In the December quarter, Kingfish delivered a gross performance return
of +3.6% and an adjusted NAV return of +3.2%, versus the +4.2%
return of the S&P/NZX50 gross index. The adjusted NAV return for the
2023 calendar year was +3.6% versus the index of +2.6%.
Highlights included Vista, F&P Healthcare, Mainfreight, and
Auckland Airport
A positive contributor was cinema software company Vista (+15% total
return in the quarter). We had previously said it will take ‘runs on the
board’ to lift investor confidence and that it is gaining traction in its
strategy to transition cinema exhibitor customers to its Digital and Cloud
products. Within a number of weeks, the company announced several
existing customers have signed up to its new product suite, including
Vue (Europe), Pathé (France), Major Cineplex (South East Asia), and
Cinépolis (Spain). It is clear traction is building and these wins will
act as proof points for undecided customers and should deliver further
momentum to its sales pipeline. The company remains confident of
achieving its medium-term ambitions, which suggests its shares remain
undervalued.
As we discussed last month, Fisher & Paykel Healthcare (+11%)
delivered a first half result which is supportive of the longer-term earnings
trajectory of the business. Across both the Hospital and Homecare
divisions the revenue growth was underpinned by strong contributions
from new products, with obstructive sleep apnea masks and anaesthesia
products the standout growth contributors.
Mainfreight (+8%) saw its share price recover after releasing its first
half result in November. A year ago we noted that Mainfreight had
made underlying progress during 2022, but this had not translated
to share price returns. 2023 was much of the same as its share price
was relatively flat despite the business further growing and intensifying
its network. During the year, the business has suffered from weaker
freight volumes than we anticipated in its local transport business, plus
inventory levels being destocked globally, which weighed on demand for
international freight. Mainfreight’s devotion to improving its business with
a long-term focus and the weaker freight environment now improving
makes us optimistic that 2024 will see a return to growth.
Auckland International Airport (+11%) had a key win during
December as the Commerce Commission released its finalised ‘Input
Methodologies’ paper. This is a 7-yearly reassessment of the framework
that guides how New Zealand airports should set aeronautical charges.
This clears the way for Auckland Airport to set these charges in the
medium term at a higher level than was contemplated in the draft paper.
Detractors from performance in the quarter included Delegat and
Port of Tauranga
One disappointing performer, where sentiment is at a low ebb,
was Oyster Bay wine maker Delegat (-21% return in the quarter). A
combination of cost pressures and customers destocking inventories
have seen earnings expectations reduced, although the business remains
strongly profitable. Net profit of $57-61 million is expected in the current
financial year, similar to last year. The share price decline in 2023 has
been disproportionate to the reduction in earnings power of the business.
Underlying growth remains solid, with sales growth in retail outlets in
the key US market still running strong at 9% despite the tough retail
environment. Management has a credible strategy to reprioritise its most
profitable sales channels, increase pricing, and substitute out third-party
grapes as more of its vineyards come online over time. This will allow
profit margins to improve over time.
During the quarter Port of Tauranga (−5%) provided earnings guidance
for its current year below expectations. It unveiled September quarter
container volumes that were 21% lower than last year, partly due to
lower transhipment volumes as shipping companies changed their routes.
There were some offsets, with September quarter log volumes up 33% on
last year as Cyclone Gabrielle caused some logs to be harvested early.
2023 was a relatively tough year for New Zealand, both in share
market returns and economically
New Zealand equity returns lagged key markets in 2023, with the
benchmark index return of +2.6% well below the US S&P 500 up
+26.3%, and Australia’s ASX 200 up +12.4%.
As a generalisation, many Kiwi companies struggled during the year
with around 70% of companies in the NZX 50 benchmark index seeing
2023 earnings expectations fall. Cost pressures and higher interest costs
meant even many so-called defensive companies were also impacted. It
was a particularly tough time for any company exposed to discretionary
spend. Kingfish’s companies that are exposed to the New Zealand
economy like Mainfreight, Freightways, and Vulcan Steel struggled to
take enough market share to offset lower same-customer volumes.
Economic growth in New Zealand is running lower than the US and
Australia and there is a similar degree of weakness in retail sales, house
prices, and construction.
For much of the year rising interest rates were a handbrake on Kiwi
consumers and companies. However, this has changed abruptly in the
December quarter, with key interest rates such as 10-year government
bond yields dropping very sharply. It increasingly appears that the
restrictive monetary policy (high interest rates) has done its job of
reducing inflation towards target levels.
While currently the immediate outlook remains somewhat subdued,
looking forward 12 months it is increasingly likely that the majority of the
‘belt tightening’ will be in the rear-view mirror and headwinds will abate
or even become tailwinds.
Regardless of what surprises the next year holds, we remain confident
that Kingfish holds a balanced portfolio of New Zealand’s highest quality
companies that have wide economic moats and strong medium to long
term growth prospects. So, we are optimistic for a prosperous 2024.
1
Share price discount to NAV (including warrant price on a pro-rated basis and using the net asset value per share, after expense, fees and tax, to four decimal places).
QUARTERLY NEWSLETTER
1 October 2023 – 31 December 2023
as at 31 December 2023
Matt Peek
Portfolio Manager
Fisher Funds Management Limited
19 January 2024
1
KFL NAV
$
1. 3 1
$
1. 2 2
Share Price
DISCOUNT
1
6.4
%

Warrant Price
$
0.0 2

2
Disclaimer: The information in this newsletter has been prepared as at the date noted on the front page. The information has been prepared as a general summary of the matters covered only, and it is
by necessity brief. The information and opinions are based upon sources which are believed to be reliable, but Kingfish Limited and its officers and directors make no representation as to its accuracy or
completeness. The newsletter is not intended to constitute professional or investment advice and should not be relied upon in making any investment decisions. Professional financial advice from a financial
adviser should be taken before making an investment. To the extent that the newsletter contains data relating to the historical performance of Kingfish Limited or its portfolio companies, please note that fund
performance can and will vary and that future results may have no correlation with results historically achieved.
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(1.2%)(8.4%)+8.4%
Adjusted NAV Return+3.2%(3.3%)+8.4%
Portfolio Performance
Gross Performance Return +3.6%(2.2%)+10.6%
S&P/NZX50G Index+4.2%(3.5%)+6.0%

Non-GAAP Financial Information
Kingfish uses non-GAAP measures, including adjusted net asset value, adjusted NAV return, gross
performance return and total shareholder return. The rationale for using such non-GAAP measures
is as follows:
»adjusted net asset value – the underlying value of the investment portfolio adjusted for capital
allocation decisions after expenses, fees and tax,
»adjusted NAV return – the percentage change in the adjusted NAV value,
»gross performance return – the Manager’s portfolio performance in terms of stock selection,
before expenses, fees and tax, and
»total shareholder return – the return combines the share price performance, the warrant price
performance, the net value of converting any warrants into shares, and the dividends paid to
shareholders. It assumes all dividends are reinvested in the company’s dividend reinvestment
plan, and that shareholders exercise their warrants, (if they were in the money), at warrant
expiry date.
All references to adjusted net asset value, adjusted NAV return, gross performance return and total
shareholder return in this newsletter are to such non-GAAP measures. The calculations applied to non-
GAAP measures are described in the Kingfish Non-GAAP Financial Information Policy. A copy of the
policy is available kingfish.co.nz/about-kingfish/kingfish-policies.
LISTED COMPANIES% Holding
Auckland Intl Airport9.2%
Contact Energy7.0%
Delegat Group1.8%
EBOS Group5.1%
Fisher & Paykel Healthcare15.0%
Freightways3.3%
Infratil17.0%
Mainfreight15.5%
Meridian Energy2.1%
Port of Tauranga2.8%
Ryman Healthcare4.1%
Summerset7.8%
The a2 Milk Company2.5%
Vista Group International3.8%
Vulcan Steel1.1%
Equity Total98.1%
New Zealand dollar cash1.9%
TOTAL100.0%
PORTFOLIO HOLDINGS SUMMARY
as at 31 December 2023
COMPANY NEWS
Dividend Paid 15 December 2023
A dividend of 2.64 cents per share was paid to Kingfish shareholders on 15 December 2023 under the quarterly distribution policy. Interest in
Kingfish’s dividend reinvestment plan (DRP) remains high with 40% of shareholders participating in the plan. Shares issued to DRP participants are at
a 3% discount to market price. If you would like to participate in the DRP, please contact our share registrar, Computershare on (09) 488 8777.
PERFORMANCE
as at 31 December 2023
Kingfish Limited
Private Bag 93502, Takapuna, Auckland 0740, New Zealand
Phone: +64 9 489 7094
Email: enquire@kingfish.co.nz | www.kingfish.co.nz
If you would like to receive future
newsletters electronically please email
us at enquire@kingfish.co.nz
SIGNIFICANT RETURNS
IMPACTING THE PORTFOLIO
DURING THE QUARTER
VISTA GROUP
+ 15
%
AUCKLAND
INTERNATIONAL
AIRPORT
+ 11
%
FISHER & PAYKEL
HEALTHCARE
+ 11
%
MAINFREIGHT
+8
%
DELEGAT
GROUP
−21
%
FOREIGN TAX COMPLIANCE ACT (FATCA) AND COMMON REPORTING
STANDARD (CRS)

As a result of the New Zealand Government agreeing to participate in the exchange of information with other jurisdictions under the Foreign Tax
Compliance Act (FATCA) and Common Reporting Standard (CRS), Financial Institutions are required to undertake due diligence to determine the
account holders’ jurisdiction of tax residence. If shareholders have not previously self-certified, they will receive a Tax Residency Self-Certification form
from Computershare depending on when they first purchased their securities. Please ensure you complete and return this important document if you
have not already done so. For more information please visit the IRD website: ird.govt.nz/international-tax/exchange-of-information/crs/registration-
and-reporting or contact Computershare if you are unsure of whether you have completed your form.