KSL (ASX) Ann: Results of 2023 AGM

Originally posted by JackDusty: ↑

Just to comment on some of your points

1. BFL (sorry, I'm old school and kept calling it BSP) has been listed on the PNGX (PomSOX) for quite some time, and was originally PNGBC, so has been around for much longer than Kina and has a much longer track record of reported performance

3. Kina's strategy is expansion (across the pacific too), BFL may be out amongst the Pacific already however these are minor outliers to be fair.

4. No it doesn't. BFL is Bank South Pacific (BSP), the original peoples bank. As BSP they spread far greater, supported many different charities across a huge amount of time and like Digicel was in PNG, basically massively visible (the green machine). It is very hard to set up a bank account in PNG, hence why people don't change, and you have to understand how the wantok network works in PNG to get to understand that if your mates cousin's brother works there, or banks there, then you do too. Kina are coming up with new strategies to sign up new customers which is great, but they are a long way behind. Which is actually good - as so much growth potential. From memory 80% of PNG citizens were unbanked, and BSP/WBC were the banks for business for many years.

7. re: my point 5. KSL is not the largest in PNG (by far) - so lots of upside, especially when BFL are in turmoil.

AU aid into PNG is an interesting concept, I recall the Chinese willing to build a fibre network around PNG, and the AU govt needed to step up and do this as that would be another foothold for China in PNG. The late Sir Michael Somare though called out AU aid as "Boomerang Aid", sending 250MIL into PNG to pay 500 "aid" workers at half a million a year - isn't aid really is it? Especially when they do policy development over 2 years, to then leave and the next person just does the same.... cynical I know.

And your final point around religion. No. There are so many different religions in PNG that this doesn't being togetherness. Wantoks (do some research on what this is) has far greater pull than any religion, and then there is Big Man (Bikpla Bossman), and politicians who can influence an entire province just by endorsing or using a service or product.

The work I now see KSL doing in the community at a larger scale than what was possible when they were smaller means they will make great inroads across the country.

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Originally posted by Darre11: ↑

Thanks for your response. If I may, I would like to correct some of the misconceptions you may have:

1) BFL commenced operations in 1957 and listed on the local exchange in 2003. KSL was establised in 1985 and listed in 2015. BFL has a PNG deposit market share of 67% vs KSL's 13%. A 67% market share in deposits in the Australian context is equivalent to the combined market share of CBA, WBC and NAB.

2) In terms of their footprint, KSL has 19 branches and 80+ ATMs vs BFL 80 branches and 500+ ATMs across PNG.

3) One reason why BFL trades at a higher book value multiple is because its ROE is nearly 28% compared to KSL's 18%. This means every dollar of BFL's equity generates more profit than the equivalent dollar in KSL. However on a P/E basis, their valuations are broadly similar today.

4) Since its IPO, KSL has increased its share count from 163.8m shares to 286.9m shares, a 75% increase which has cause significant dilution to shareholders. BFL on the other hand has marginally reduced the number of shares from 467.5m shares to 467.2m shares given its buyback plan. This has contributed to KSL 's low annualised return since IPO (including all dividends) of 4.1%. Over the same period, BFL annualised return (in AUD) was 11.7%. If measured in PGK, it would have been higher as PGK has devalued by 20% since 2015.

5) In my view, the most important economic development in PNG over the next 5 years would be the approval and construction of Papua LNG. A US$10 billion LNG project kicking off in a country with a US$30 billion GDP would lift all boats. Everything else would be a sideshow.

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Thank you both. A few points in your posts which are new to me and worthy of a great analysis. I would then have to sum up my decision as lack of liquidity on BFLs part and KSL having traded well below its book value (~ 75cents per share) which given its financial performance and market conditions for future performance seemed highly inappropriate.

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(20min delay)
Last 98.0¢		Change -0.010(1.01%)		Mkt cap ! $281.6M

Open	High	Low	Value	Volume
$1.00	$1.00	98.0¢	$357.2K	358.4K

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