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KSL - Kina Securities

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previously i had a strong aversion to PNG ( and Africa ) before mid-2021

but after observing government policy changes ( in QLD and Australia in general ) i reconsidered my bias and bought into KSL and ZIM

as the relative geo-political risk spectrum has changed , very hard to spot the risk difference between Africa and Europe now

the ( initial ) KSL investment cash was earmarked to go into VUK before several UK policy moves in 2021

PS was hoping to grab a few more KSL today but the market moved the opposite direction to my order
 
KSL went ex-div. today so i picked up a few more @ 74 cents today

interesting times ahead it seems
 
galumay said:
Yes, i bought a heap more 3 days ago, now an 8% divvy next month!
Click to expand...
have done OK on some of these ( ASX-listed ) international shares in smallish nations ( like PNG and NZ )

maybe because the bigger funds avoid them
 
Its pretty compelling at those sort of prices! Not a lot of downside other than the sovereign risk of operating in PNG. You have a yield of nearly 15% so your money back in 5 years, and thats before any upside opportunity!
 
galumay said:
Its pretty compelling at those sort of prices! Not a lot of downside other than the sovereign risk of operating in PNG. You have a yield of nearly 15% so your money back in 5 years, and thats before any upside opportunity!
Click to expand...
Considered it was a fairly unique opportunity overall, considering broad economic conditions and the share price around all time average lows and near a year low also.

PNG to me means Fuzzy Wuzzies, and some may know of the help they afforded our armed forces, so I'm not afraid of any perceived sovereign risk here.

 
galumay said:
Its pretty compelling at those sort of prices! Not a lot of downside other than the sovereign risk of operating in PNG. You have a yield of nearly 15% so your money back in 5 years, and thats before any upside opportunity!
Click to expand...


i used to think so until i took a deep breath and reconsidered the QLD government . the Victorian government after the Lakes Oil saga

and remember Albo is seemingly losing the plot , on his election promises

sudden;y CAREFUL dabbles , in PNG , and other small nations look better than some local small caps

ALSO there is a possible FX tailwind/headwind for those not wanting to be 100% exposed to the local peso
 
I dont take any notice of politics or economics, I find it simpler and easier just to own businesses that are resilient to most of the range of possible outcomes. My point was more that there is limited downside to KSL from here, but the sovereign risk is one that is present. Its probably the main reason the price is so disconnected from valuation, and it will likely always be so, this means opportunity for capital appreciation can be very limited. UOS is another foreign domiciled business on the ASX that also trades well below book value let alone intrinsic valuation. Australian investors are very reticent to invest where they perceive sovereign risk.
 
For a stock like this, I would think this qualifies as a breakout, of the molasses or paint drying type though. ?

Part of the consideration in me buying this, was time in the market AND timing the market.
I consider the timing part is still attractive, for now.

 
Looks good - on the verge of breaking up and out of its downtrend imo. Hourly and 15 minute charts going exponential, albeit on normal slow volume. If two such sober posters are backing it (not you frugal.rock, lol) I might snag a few if there's a short pullback. I have no faith in PNG.
I get median ROE of 16%, yet it's trading under book value and the lush dividend has been discussed.

Not Held

All Data WEEKLY
 
Included in this sovereign risk is the outrageous corporate income tax rate of 45%. If this was ever reduced then there'd be a welcome revaluation.
 
I guess you can look at this two ways, despite the 45% corporate tax rate, KSL has been able to provide extraordinary returns to shareholders, any reduction in tax rate would make them even more attractive to investors. I guess there is a risk it might increase to an even higher rate, not sure how likely that would be?
 
KSL with a decent H1 2023 result, solid single digit growth across metrics. Nothing exciting or frightening! Pass go & collect the divvy!

 
I am confused about the trading update you posted, its dated 18/12/23 but its about results from the previous year! (H2 2022). The only announcement for this year is one about Perpetual reducing its shareholding.
 
Significant (PKG 12M - 15M) customer fraud event reported by KSL. Share price falls 8%.

Isolated event and chance to buy cheaper or red flag for poor management.
 
Hi @peter2, I haven't spent much time on this yet, but it crossed my mind too, maybe a good opportunity to add. It was already cheap and a one off impact on NPAT, even if they recover nothing thru the courts or insurance, is not such a big deal.

As you say, question is did management miss this through incompetence or was it something that was hard to predict/identify?

I will have a think about it!
 
I hope we get a few more details so we can then make a more informed decision. Currently my intuition thinks it's a good buy the dip opportunity but certainly don't want it be the first visible cockroach.
 
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