An Investor’s Cheat Sheet: Jardine Strategic Holdings Limited

Bourse operator Singapore Exchange Limited (SGX: S68) had made a big change to Singapore’s investing scene back in January this year when it officially reduced the board lot size from 1,000 units to 100.

With the change, interest in higher-priced stocks in Singapore among retail investors started climbing. To that point, Singapore Exchange’s latest earnings release had mentioned that trading activity among retail investors for stocks that make up the Straits Times Index (SGX: ^STI) had picked up since the board lot size was cut.

(Stocks that are part of the Straits Times Index are generally the ones with the higher share prices in Singapore).

One of the highest-priced stocks in the Straits Times Index is Jardine Strategic Holdings Limited (SGX: J37).

At its current share price of nearly US$29.66, an investment into Jardine Strategic at the old lot size would see an investor have to cough up tens of thousands of dollars at the minimum. With the new lot size in place, the minimum sum has been shaved all the way down to the neighourhood of US$3,000.

But just because it’s easier to buy shares of Jardine Strategic now does not mean we should be buying. For anyone who’s interested, it’s important to understand its business first.

Jardine Strategic is a collection of many different businesses with most of them also listed on Singapore’s stock market. With its fingers in many pies, it may be hard to grasp the workings of the firm. To help you with understanding Jardine Strategic, here’re all of the company’s important parts:

  1. Hongkong Land Holdings Limited (SGX: H78) – The company, which is 50% owned (all data related to ownership stakes hereafter are as of 11 March 2015) by Jardine Strategic, is an owner of prime commercial and retail properties in many Asian cities. Hongkong Land’s focus though, is on Hongkong and Singapore in this line of business. Meanwhile, the firm’s also a developer of high-end residential real estate in many different parts of Asia.
  2. Dairy Farm International Holdings Ltd (SGX: D01) is a pan-Asian retailer that has more than 6,400 retail outlets at the moment. The company’s retail operations include supermarkets, hypermarkets, convenience stores, health & beauty stores, restaurants, and more. Some of its brands include Mannings, Guardian, Giant, and Cold Storage. Dairy Farm’s 78%-owned by Jardine Strategic.
  3. Mandarin Oriental Limited (SGX: M04) – The hotelier, with a portfolio of 44 hotels and resorts around the world, is 73% owned by Jardine Strategic.
  4. Jardine Cycle & Carriage Ltd (SGX: C07) is itself a conglomerate by virtue of its ownership of just over 50% of Indonesia-based and listed Astra. Astra counts itself as Indonesia’s largest automotive group and also has other diverse business interests including oil palm, banking, mining, heavy equipment, and more. Jardine Strategic has a 74% stake in Jardine C&C.
  5. Jardine Matheson Holdings Limited (SGX: J336), which is 56% owned by Jardine Strategic, has 100% ownership of Jardine Pacific Limited and Jardine Motors Group. The former’s involved with construction, transport services, restaurants, and IT services. Meanwhile, the latter’s in the business of motor vehicle sales in Hong Kong, Macau, the U.S., and parts of China. Jardine Matheson also has a 42% interest in Jardine Lloyd Thompson, a leading insurance outfit based in London.

Unpacking the confusion

Interestingly, Jardine Matheson actually owns an 82% stake in Jardine Strategic too. This creates a complex cross-holding structure between Jardine Matheson and Jardine Strategic which can be a big headache for anyone who’s trying to unravel the intricacies.

But, what’s crucial here is for investors to keep an eye on the deemed interest that Jardine Strategic has on all the other companies mentioned above. Here’s the list again, with Jardine Strategic’s deemed interest given in parentheses:

  1. Hongkong Land (50%)
  2. Dairy Farm (78%)
  3. Mandarin Oriental (73%)
  4. Jardine Cycle & Carriage (74%)
  5. Astra International (37%)
  6. Jardine Pacific (56%)
  7. Jardine Motors (56%)
  8. Jardine Lloyd Thompson (23%)

A focus on Jardine Strategic’s deemed interests might be a simpler way to understand the company. Jardine Strategic’s currently trading at 10.5 times its trailing earnings and offers a dividend yield of 0.9% thanks to its annual dividend of US$0.27 per share.

There're a lot more interesting things about the conglomerate and investing to talk about and if you'd like to do it in person, you can come meet David Kuo and the rest of the Fool Singapore team on August 15! 

Please join us at Invest FAIR Singapore on 15 August. (Suntec Centre, Booth B-16). Come chat with us at our booth, and see our MAS-licensed Director, David Kuo, give his official SGX investor presentation.

You won't want to miss this! Add Invest FAIR Singapore to your calendar today.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns Dairy Farm International Ltd and Jardine Cycle & Carriage Ltd.