Singapore’s retail scene is undergoing a major rejuvenation, including the Orchard shopping belt that is worth some $4.4bn. Always the first choice in handling the most stringent retail fit out works for high-end retail boutiques, Kingsmen has garnered contracts for 20 shops out of an estimated 50 high-end boutiques at the ION Orchard.

Kingsmen is also in sweet spot to benefit from the two upcoming IRs. Filled with contracts worth $80m from the Universal Studios, we believe more contract wins are likely, possibly exceeding $100m by year-end. This is in view of a potential retail fit out space of up to 1.26m sqf at the Resorts World, non-mechanical works on the Universal Studios of up to $300m and an expected influx of MICE activities.

Armed with powerful and precious experience of delivering contracts for the Formula One Grand Prix, Orchard Shopping malls and the Integrated Resorts, Kingsmen’s impressive work will gain visibility worldwide. The group’s track record and experience in these high-profile projects will be increasingly sought after in the global arena. This opens doors to boundless opportunities for world-class attractions, particularly in the areas of theme parks, Formula One and the Olympics.

Superior quality of its products and services has enabled the group to derive up to 70% of its interiors revenue from repeated customers, which include world-class brands like Apple, Burberry and Chanel etc. Moreover, its interior division will grow along with the ongoing expansion plans of its blue-chip clients globally. We estimate 30% of Kingsmen’s earnings are recurring, which bodes well for its earnings stability ahead.

While having superior earnings quality and ROE, Kingsmen is trading at a mere 5.9x forward PER and at a sharp discount to peers. Besides offering a timely exposure to the Singapore IRs, Orchard rejuvenation and boundless regional growth, kingsmen has been generous in paying dividends. We estimate a FY09 DPS of 3 cents ~ a yield of 6%. Our conservative forecasts have yet to factor in possible contracts overseas in the area of theme parks, F1 and major events such as the Shanghai Expo. Reiterate BUY.