An Investor’s Look At Jardine Strategic Holdings Limited’s Valuations: Today vs. History

Conglomerates are companies with various business interests which gives them diverse profit streams. There are no shortages of conglomerates in Singapore’s market and one of them happens to be Jardine Strategic Holdings Limited (SGX: J37), which is part of the sprawling Jardine business empire.

Jardine Strategic holds stakes in many other Singapore-listed companies such as Jardine Cycle & Carriage Ltd (SGX: C07), Hongkong Land Holdings Limited (SGX: H78), Dairy Farm International Holdings Ltd (SGX: D01), and Mandarin Oriental Limited (SGX: M04). It also has a complicated relationship with its sister company Jardine Matheson Holdings Limited (SGX: J36) – both companies have stakes in each other.

But the focus for the day is not on Jardine Strategic’s business. In here, I thought it’d be interesting to look at the current valuations of the company and compare them with their historical ranges.

Right now, Jardine Strategic has a price-to-earnings ratio of 8 and a price-to-book ratio of 0.73 at a share price of US$31.72.

The following chart shows how the company’s PE ratio has changed over the past five years:

Jardine Strategic's PE ratio from 11 August 2011 to 11 August 2016
Source: S&P Global Market Intelligence

The next chart is for the company’s PB ratio, again for the last five years:

Jardine Strategic's PB ratio from 11 August 2011 to 11 August 2016
Source: S&P Global Market Intelligence

What the first chart shows is that Jardine Strategic’s current PE ratio is near the middle of where the metric has been for the timeframe under study. But what’s interesting is that the company’s PB ratio is now near a five year low.

None of the above is supposed to be seen as a sign that Jardine Strategic is a bargain right now. After all, the two ratios are based on past information whereas a company’s future stock price will largely depend on the performance of its business in the years ahead. The ratios are also quantitative in nature and tell us little about the qualitative aspects of a business.

There are many other factors that have to be considered before any investing conclusion can be reached with Jardine Strategic. What we’ve seen here is only a useful starting point for furThis is especially important since the ratios are quantitative and historical in nature, yet, tell us little about the qualitative part of the companies.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.