Kingsmen duo stick to basics

PHOTO: Kingsmen duo stick to basics

SINGAPORE - Kingsmen Creatives co-founders Benedict Soh and Simon Ong have spent the better part of the past 40 years aiming to be innovative and groundbreaking when creating displays for stores and museums.

But when it comes to running their business, the duo has stuck unwaveringly to a simple formula all these years: Do a good job, and do right by your customers.

It may sound like common sense and a cliche, but Kingsmen has applied that philosophy with consistency and success.

Since its listing in 2003, Kingsmen has grown its market capitalisation almost six times, from $30 million to $176 million now. Earnings per share have more than doubled to 8.9 cents in 2012 from 3.8 cents in 2002. The company has paid out a dividend every year since listing, and is currently yielding about 4.4 per cent based on 12-month historical payouts. Kingsmen has been profitable every year since listing.

The stock is well liked by analysts. AmFraser has a "buy" call on the stock "for its quality management and consistent earnings deliver". DMG & Partners likes its "sturdy balance sheet".

Kingsmen's executive chairman, Mr Soh, explains why: "We supply quality work that clients keep on coming back for. That's the fundamental of Kingsmen's foundation."

Kingsmen's track record is a combination of strategy and luck.

The company, which designs and builds interiors and displays for retail stores, museums, conferences and exhibitions, has close to 20 offices in the Asia-Pacific and the Middle East, employing 1,500 creative staff and technical managers.

About 42 per cent of its sales in 2012 came from Singapore, followed by 22 per cent from the greater China region.

Geographically, the company has chosen to focus on Asia.

"We have chosen to focus only in the Asia-Pacific region as far as setting up our own offices is concerned. In the last three to five years, the growth has been in this region. So we are well positioned to take advantage of the faster growth in Asia," Mr Soh said.

Kingsmen also prides itself on its range of offerings. The company's services run across the supply chain, from designing concepts from scratch to mass-producing fittings for clients who have hundreds of stores around the world. The company has, over the past few years, also begun to clinch projects at theme parks, opening a new channel for future business.

"Imagine these are assorted chocolates, we have so many of all these chocolates, from design to build," said Mr Ong, the group managing director. "We offer the whole box of chocolates to our customers . . . but we can also sell individual chocolates if you want."

The company is "an indirect proxy to Asia's growing consumerism", CIMB analyst Kenneth Ng wrote in a report in June.

The unfortunate implication of that view, however, is that Kingsmen's fortunes tend to be cyclical and highly tied to its markets' retail economies.

Recalling past regional recessions such as the Asian Financial Crisis, Mr Soh likens the experience to operating in "survival mode". Luck came into play in Kingsmen's fortunes during the Global Financial Crisis, with the opening of Singapore's integrated resorts. That gave the country's retail scene an invaluable boost, and Kingsmen an invaluable cushion in an otherwise down market.

Beyond new theme park business, the resorts also added retail space, and drew more visitors who stayed longer and spent more - all positives for retail in Singapore.

"Our growth is very much in keeping with the growth of Singapore in the last five to 10 years, and especially post the two integrated resorts," Mr Soh said.

Kingsmen, which has won theme park contracts in Singapore, Hong Kong and Shanghai, sees theme parks as a promising growth driver.

Its consistency is also a reflection of the company's record in customer retention. Mr Soh said about 70 per cent of the business comes from repeat customers.

Getting customers to come back requires, first of all, that every job be well done.

"We are as good as our last job, so we must make sure that whether we make more money or less money the first thing is to get the job done well," Mr Ong said.

Kingsmen, which had a net profit margin of about 6 per cent in 2012, also makes it a point to price its services competitively, Mr Ong added. The company even goes as far as to work with customers during tough economic times to ensure that jobs can still be done, he said.

Finding talent has always been a limiting factor for the company, and Kingsmen has been trying to address that by setting up its own Kingsmen Academy to train its staff, the directors said.

But perhaps the more concerning talent issue, as some analysts told The Business Times, is the one that Kingsmen will face when Mr Soh, 64, and Mr Ong, 60, finally decide to call it a day.

The two directors say that a succession plan has been in place since the company was listed. Currently, exhibitions and museums managing director Anthony Chong, interiors business managing director Alex Wee and general manager Andrew Cheng form the team that is being groomed to take over from Mr Soh and Mr Ong, who have been working side-by-side since they founded Kingsmen in 1976.

Some of the early transition has already begun.

"We would be handing over step by step," Mr Soh said.

"As it is, we've already been doing it. As you can see in the last two, three years, there was a slight change already. Two of us, just one holding the CEO, and just one holding the chairman position. So, in the next two to three years, we expect more changes of this nature. But it doesn't mean we will just quit like that. We will ensure that things are done smoothly so that we can just fade into the sunset, and not just die in the office. That would be irresponsible."

Mr Soh described their philosophy of a successful company as one that lasts beyond its founders.

"An organisation is dynamic," he said. "It's an animal by itself, that you should feed it, you should nurture it so that it can grow strong and go on racing ahead."


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