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Understanding Jardine Cycle & Carriage Ltd

Investors who had invested in Jardine Cycle & Carriage Ltd (SGX: C07) a decade ago would have done exceptionally well. The conglomerate is the third best performing blue-chip share in Singapore’s stock market, with an annual return of 18% over the past 10 years.

But, Jardine Cycle & Carriage is not a simple business to understand. It has multiple business segments that operate in various industries as the illustration below shows. To help investors better understand Jardine Cycle & Carriage, this article will have a quick rundown on each of its business segments.

Source: Jardine Cycle & Carriage website

Astra International

Jardine Cycle & Carriage has a 50.1% stake in Indonesian-listed Astra International. In 2017, Astra International contributed US$640.7 million in profit, which is approximately 82% of Jardine Cycle & Carriage’s total profit for the year. The bulk of Astra International’s business comes from (1) its automotive segment that comprises the production, distribution, retail, and after-sales services of motor vehicles and (2) heavy equipment, mining, construction, and energy which comprises the supply of construction and mining equipment.

Source: Jardine Cycle & Carriage annual report

Astra International has a market capitalisation of around S$32.6 billion, which puts the value of Jardine Cycle & Carriage’s stake at S$16.3 billion.

Direct motor interests

Jardine Cycle & Carriage also owns a direct interest in regional automotive distribution, retail, and service operations. It has a presence in Singapore, Malaysia, Myanmar, Indonesia, and Vietnam. In total, the company’s direct motor interests contributed US$124.6 million in profit in 2017, representing about 15.7% of overall profit.

Other strategic investments

Lastly, the conglomerate has direct investments in businesses outside automotive distribution. There are three main investments worth noting:

1. A 25.5% stake in Siam City Cement, which is listed on Thailand’s stock exchange;
2. A 23.9% stake in Refrigeration Electrical Engineering Corporation, which is listed on the Ho Chi Minh Stock Exchange in Vietnam; and
3. A 
10% interest in Vinamilk, a dairy producer in Vietnam

These investments serve to diversify Jardine Cycle & Carriage’s income stream and contributed US$34.3 million, or 4.3%, to the company’s total profit in 2017.

The Foolish bottom line

Jardine Cycle & Carriage has been one of the top performing blue-chip stocks over the past decade. Its core automotive business has performed well, with Astra International also excelling. Additionally, the conglomerate’s diversified business model also makes it an appealing investment to conservative investors.

At the time of writing, Jardine Cycle & Carriage’s share price is at S$36.61, which works out to a price-to-book (PB) ratio of 1.77, a price-to-earnings (PE) ratio of 18.2, and a dividend yield of 3.2%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore contributor Jeremy Chia does not own shares in any company mentioned.