(Stocks Discussion) SGX: Jardine Matheson Holdings Limited (SGX: J36)?

Personally too long to write here. It is the congolermate whose business spans across many industries and countries. SOme of the reuputable brands under jardine group includes the Mandarin Oriental Hotel Chain, Cold Storage, Astra of Indoesia etc.

In my opnion if you have a portfoilo of a few hundered thousands, the jardine names should constitute to a small weightage of your stock portfoilo. Its a bellweather company which is well diversified globally even though it has Hong Kong origins.​​​

TL;DR The firm is a well-diversified business across regions and industries. However, regional risk and competition might affect future performance. There have been not much changes YOY for financials.

Business Profile

The business is a conglomerate and is uniquely dual-listed in both Singapore and London. The company’s history stretches all the way to 1832 in China. They operate in multiple industries that include property, retail, and luxury hotels to motor vehicles, engineering and construction to transport. 

Financials

Income Statement

Revenue had increased YOY from FY17 by almost 10% to 42bn. However, a decrease in change in fair value of investment led to a decrease in operating profit and subsequent net profit.

Balance Sheet

Current Ratio is slightly more than 1, which reflects a short-term liquidity position which is not that strong. Leverage is about 0.25, which seems to suggest that the business is properly leveraged. Debt / EBITDA is around 3.5, which seems to suggest that the firm’s coverage is fine.

Cashflow

Cashflow from operating activities is almost the same as FY17, despite operating profit being almost 50% lower. This is mainly due to non-cash expenses forming a significant chunk of operating profit, but yet does not affect cashflow.

Cashflow from investing activities had more outflow because of significant purchase of subsidiaries and tangible assets.

Cashflow from financing activities was largely similar to the previous year.

With a TTM EPS of 4.60, the firm is trading at 13.71 P/E ratio. With a 4 year EPS of $4.62 to $10.06, their EPS is within this range.

Opportunities

Diversification of Businesses

The diversification of the business across industries and regions helps to reduce the concentration risk in the portfolio, making it less volatile. Also, strong growth from developing countries such as Vietnam helps to develop their business even further.
Emerging Markets Volatility

Since the portfolio is spread throughout Asia, much of the risk that the firm is exposed to is regional risk. Political instability, fluctuating growth and currency risk all can impact the firm’s performance.

Competitive Landscape

Despite overseas expansion, the business probably faces high pressure from local companies who may have developed a foothold there. The expansion of conglomerates into the developing regions also affect competition that JM faces.