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The Three Numbers That Put Jardine Cycle & Carriage Limited In Gear

Jardine_Cycle_&_Carriage_LogoSome of us might think of Jardine Cycle & Carriage (SGX: C07) as merely a distributor of cars in Singapore. It does sell cars but it does a lot more than that.

As a result of its stake in Indonesia’s Astra International, Jardine C&C is a conglomerate with interests that include mining, palm-oil production, financial services and vehicle leasing.

Its exposure to Indonesia and also to commodities can be both a blessing a curse. It can play havoc on the company’s Return on Equity that has been as high as 13%. In 2013, it was 8.7%.

Last year, Jardine C&C reported a Net Income Margin of 4.6%, which implies the company made $4.60 on every $100 of sales. That is below the average for Singapore’s blue chips. The median margin for the 30 companies that make up the Straits Times Index (SGX: ^STI) is 15%.

That said, Jardine C&C is very good at sweating its assets. Its Asset Turnover of one implies that it generates S$1 of sales for every dollar of asset employed in the business. This is almost double the market average.

Jardine Cycle & Carriage is not heavily leveraged even though it does have some borrowings. Its Leverage Ratio of 1.9 is only marginally higher than the market average of 1.6.

By unmeshing Jardine C&C’s Return on Equity, it is easy to see what puts the company in gear. Its RoE of 8.9% is the result of a modest Net Income Margin of 4.6%; a high Asset Turnover of one and a modicum of Leverage Ratio of 1.9.

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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 Director David Kuo doesn’t own shares in any companies mentioned.