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Jardine Matheson Holdings Limited Is Trading Close To Its 52-Week Low Price: Is It A Bargain Now?

Jardine Matheson Holdings Limited (SGX: J336) is a conglomerate with interests in the web of Jardines companies which include Jardine Cycle & Carriage Ltd (SGX: C07), Hongkong Land Holdings Limited (SGX: H78), Dairy Farm International Holdings Ltd (SGX: D01), Mandarin Oriental Limited (SGX: M04), Jardine Lloyd Thompson, Jardine Pacific and Jardine Motor.

Jardine Matheson is currently trading close to its 52-week low price. This raises the question: Is the company trading at a bargain price now?

Unfortunately, there is no easy answer to this. We can look at the company’s valuation for some clues though. In this article, I will compare Jardine Matheson’s current valuation to the market in terms of three perspectives – price-to-book (PB) ratio, price-to-earnings (PE) ratio and dividend yield. This should give us some hints whether the company is trading at a bargain price.

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).

Jardine Matheson currently has a PB ratio of 1.1 times, which is lower than the SPDR STI ETF’s PB ratio of 1.3. This makes Jardine Matheson 20% cheaper than the market based on the PB ratio. Moreover, Jardine Matheson’s PE ratio is 44% cheaper than that of the SPDR STI ETF’s (6.6 vs 11.7).

As for dividend yield, Jardine Matheson has a lower dividend yield of 2.45% as compared to the market’s yield of 2.87%. Thus, Jardine Matheson is currently trading at a premium of 17% to the market’s yield.

Putting all together, we can argue that Jardine Matheson is probably trading at a bargain price, mainly due to its low PB and PE ratios, partially offset by its lower-than-market dividend yield.

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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. Motley Fool Singapore has a recommendations for Hongkong Holdings Limited and Dairy Farm International Holdings Ltd.