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Half-year Earnings Up 1% for Jardine Strategic Holdings

200px-Jardine_Matheson_Holdings_logo.svg Investment-holding conglomerate Jardine Strategic (SGX: J37) released its half-year results last Friday.

For a big-picture view of how the company did, revenue for the half-year slid very slightly by 0.2% year-on-year to US$16.7b while half-year profit inched up by 1% to US$860m. JSH’s underlying profit, “a key measure which provides additional information to enhance understanding of [its] underlying business performance” by stripping away non-trading items, actually grew by 7% to US$819m.

As an investment-holding company, JSH is actually a majority owner of a number of other Singapore-listed entities and their corporate performance is what drives JSH’s results.

These are the companies that JSH owns:

  • Jardine Matheson Holdings (SGX: J36), part of the Jardine Matheson Group and has the same investment-holding characteristics of JSH in a number of diverse businesses.
  • Hongkong Land (SGX: H78), a real-estate developer of commercial and residential properties in Asia.
  • Dairy Farm Holdings (SGX: D01), a leading pan-Asian retail group with more than 5,600 outlets spread across the continent.
  • Mandarin Oriental (SGX: M04), operator of luxury hotels and resorts around the world.
  • Jardine Cycle & Carriage (SGX: C07), a company with motor interests in South-East Asia and which owns 50% of Indonesian conglomerate Astra, which in turn has a hand in industries that span from automobile sales to insurance banking and information technology to palm oil production.

Let’s dive down a little deeper into each individual entity to see how they contributed to JSH’s results.

JMH’s directly-owned businesses had a mixed bag of performances. Some highlights included losses in the company’s Kentucky Fried Chicken restaurant-operations in Taiwan, in addition to lower profits from Hong Kong Air Cargo Terminals stemming from increased staff costs and rebates.

For the half-year period, Hongkong Land saw higher rents from its commercial properties as well as the completion of two residential projects in Singapore. These developments helped Hongkong Land increase the value of its investment properties modestly and the improvement trickled down to JSH’s bottom-line.

Dairy Farm posted a 10% year-on-year sales growth for the half-year period to US$6b. But, profits couldn’t keep up and saw a 6% decline to US$229m. The retailer cited “increased costs” in Malaysia and Singapore as a reason for the decline in profit margins but also noted that progress is being made to boost said-margins.

Hotelier Mandarin Oriental “enjoyed positive trading conditions and achieved good performance across most of its portfolio” that saw it post a half-year profit of US$57m, a 90% increase compared to a year ago.

Jardine Cycle & Carriage’s profit for the half-year slipped 11% year-on-year to US$453m, predominantly due to Astra’s lower earnings and a weaker foreign-currency exchange rate. In the first six months of 2013, Astra faced “increased competition in the motor car sector, higher labour costs, and lower commodity prices”, all of which lead to its lower earnings.

As a wrap-up, Sir Henry Keswick, Chairman of JSH, commented on JSH’s results, “[Jardine Strategic’s] businesses are experiencing challenging conditions in a number of markets, although most have adapted well and are trading satisfactorily. Compared with 2012 the full-year performance of the Group is expected to be broadly unchanged.”

JSH had declared an interim half-year dividend of US$0.075, a 7% increase over last year’s dividend of US$0.07 for the corresponding period.

Shares of JSH closed at US$33.47 on Friday, carrying a last-12-months’ PE ratio of 11.2 and a dividend yield of 0.7% based on 2012’s full-year pay-out.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.