Here’s How Jardine Cycle & Carriage Ltd’s Valuation Compares with The Overall Market

Jardine Cycle & Carriage Ltd (SGX: C07) is one of the companies in Singapore’s stock market that are under the giant umbrella of the Jardine group of companies. Some of the other members of the Jardine family include Jardine Strategic Holdings Limited (SGX: J37)Mandarin Oriental Limited (SGX: M04), and Jardine Matheson Holdings Limited (SGX: J36).

On its own, Jardine C&C can be considered to be a conglomerate with a diverse set of businesses. That’s because the bulk of its revenue and profit comes from its 50% stake in Indonesian company Astra, which has many business segments such as automotive, financial services, heavy equipment and mining, agribusiness, and more.

Since hitting a low of around S$31 each in May 2016, shares of Jardine C&C are today exchanging hands at US$43.76 apiece. This represents a gain of over 40%. As such, investors who are interested in the company may wonder whether the company’s expensive after this run up?

There is no easy answer, but we can get some insight by comparing Jardine C&C’s current valuations with the market’s.

The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

Here’s a chart showing the PB ratios of Jardine C&C and the SPDR STI ETF:

PB ratios for Jardine C&C and SPDR STI ETF
Source: S&P Global Market Intelligence and SPDR STI ETF website

At Jardine C&C’s current stock price, it has a PB ratio of 2.09, which is higher than SPDR STI ETF’s PB ratio of 1.17. So, from the perspective of the PB ratio, the company can be said to be 79% more expensive than the market.

The next chart we’re studying shows the PE ratios of Jardine C&C and the SPDR STI ETF:

PE ratios for Jardine C&C and SPDR STI ETF
Source: S&P Global Market Intelligence and SPDR STI ETF website

From the chart just above, we can see that Jardine C&C’s PE ratio is also higher than the market (17.0 vs. 12.9).

The last chart we have here is for the dividend yields of Jardine C&C and the SPDR STI ETF:

Dividend Yields for Jardine C&C and SPDR STI ETF
Source: S&P Global Market Intelligence and SPDR STI ETF website

Jardine C&C has a dividend yield of 2.45% right now, which is lower than the market’s yield of 3.04%. (The higher the yield is, the lower a stock’s valued.)

To sum up what we’ve seen, we can argue that Jardine C&C is currently priced at a premium to the market, taking into account the company’s higher PB ratio and PE ratio, and lower dividend yield.

But, it’s worth noting that none of what we’ve seen above should be taken as the definitive word on whether Jardine C&C will be a poor or good investment going forward. Valuation metrics are just one of the many important aspects about a company that investors should study before any investing decision can be reached.

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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.