Understanding The Profitability Of Jardine Strategic’s Different Businesses

Jardine Strategic Holdings (SGX: J37) is a conglomerate that has substantial holding interest in Dairy Farm International  (SGX: D01), Jardine Cycle & Carriage (SGX: C07), Hongkong Land (SGX: H78) and Jardine Matheson (SGX: J336).

Its subsidiary and other investments are involved in businesses ranging from food to property development, hotels, automotive, financial services etc…

Given the diversity of the businesses within the conglomerate, investors may have trouble understanding how attractive each business could be.

We will try to address the issue by doing a simple exercise – calculating and comparing the return on equity (ROE) of the different business segments.

Analysis of profitability of business segments:

USD$ million Jardine


Hongkong Land Dairy Farm  Mandarin Oriental Jardine C&C Astra
Underlying profit attributable to shareholder 191 452 332 67 127 354
Shareholders’ funds 2240 14342 1254 976 803 3118
Return on equity (ROE) 8.5% 3.2% 26% 7% 16% 11%

  Data source from 2015 Annual Report

Key observation:

Here, we can see that Dairy Farm is the most profitable business segment within the group, follow by Jardine Cycle and Carriage, Astra, Jardine Matheson, Mandarin Oriental and Hongkong Land.

Jardine Matheson is itself a conglomerate with diverse business interests, similar to those of Jardine Strategic. As such, it may be less relevant to include Jardine Matheson into the above analysis.

Serious investors may want to take the next step of including understanding Jardine Strategic’s stakes in each business above. Doing so will help investors better understand the attractiveness of the whole Jardine Strategic group.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.The Motley Fool Singapore has recommended shares of Dairy Farm International Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.