What You Need To Know About Jardine Cycle & Carriage Before Investing

Jardine Cycle & Carriage Ltd (JCC) has its roots traced back to as far back as the year 1899 when the Chua Brothers set up the Federal Store in Kuala Lumpur. Back then, it was a sundry shop, selling anything from soaps, to screwdrivers, to bicycles. Subsequently, it trades motor vehicles, expanded its business into Singapore, and was renamed to Cycle & Carriage in 1926.

Cycle & Carriage started to sell Mercedes Benz vehicles in 1951, was listed on Bursa Malaysia and commenced retailing of Mitsubishi vehicles in Singapore in 1977. In 2000, it began to sell Kia vehicles in Singapore and invested a 31% stake in P.T. Astra International Tbk, a leading conglomerate in Indonesia.

In 2002, Jardine Strategic had acquired a majority stake in Cycle & Carriage and integrated it into the Jardine Matheson Group. Two years later, Cycle & Carriage was renamed to JCC. Since then, it continued to make investments into strategic companies and thus, had expanded into a leading international & multi-industry conglomerate in Southeast Asia.

As I write, JCC is worth S$ 13.6 billion in market capitalization. It is amongst the 30 constituents of the Straits Times Index (STI) as it is one of the largest stocks listed on the SGX. Here, I’ll list down 8 quick things that you need to know about JCC before you invest.

#1: Stock Symbol

Ticker Symbol: SGX: C07
Market Capitalization: S$ 13.6 Billion (2 June 2018)

Share Price: S$ 34.43 (2 June 2018)

Industry: Multi-Industry

#2: The Business

Presently, JCC derives income from:

  1. 50.1% Stake in P.T. Astra International Tbk (Astra)
    Astra is a leading Indonesia-based conglomerate which has a diverse business interest mainly in automotive, financial services, mining and construction equipment and palm oil. It is the sole distributor of cars under brands such as Toyota, Daihatsu, Peugeot, and Isuzu. Astra has 44.6% stake in Permata Bank, 59.5% stake in United Tractors, the sole distributor of Komatsu Ltd’s heavy equipment in Indonesia, and also 79.7% stake in Astra Agro Lestari, a major producer of crude palm oil in Indonesia. Astra is the key income contributor to JCC as Astra had contributed US$ 640.7 million in underlying profits to JCC in 2017.
  2. Direct Motor Interests
    JCC has established a strong presence in the automotive market across Southeast Asia. Its motor portfolio consists of 100% stake in Cycle & Carriage Singapore, 59.1% stake in Cycle & Carriage Bintang Berhad that is now listed on Bursa Malaysia, 60.0% stake in Cycle & Carriage Myanmar, 44.4% stake in Tunas Ridean in Indonesia, and 25.1% stake in Truong Hai Auto Corporation in Vietnam. In 2017, JCC’s portfolio of motor businesses had contributed US$ 124.6 million in underlying profits and thus, is the second income contributor to JCC.
  3. Other Strategic Interests
    JCC has begun to diversify into businesses of other industries in the year 2015. As at 31 December 2017, this division owns 25.5% stake in Siam City Cement in Thailand, 23.9% stake in the Refrigeration Electrical Engineering Corporation and 10.0% stake in Vinamilk. This segment contributed US$ 34.3 million in underlying profits to JCC and hence, is the smallest income contributor to JCC.

#3: The Financials

Here, I’ll provide a summary of JCC’s financial results over the last 3 years.

In 2015, Astra had recorded its weakest financial results. This is due to lower volume of car and Komatsu tractor sales, lower CPO production, and profits from Permata Bank. It had caused JCC to record S$ 954.0 million in earnings in the year 2015, substantially lower than earnings of S$ 1.2 billion in 2012.

In 2016, Astra has achieved improvements in most of its businesses. The only exception was Permata Bank. It had incurred substantial losses due to higher loan-loss provisions in that year. The losses have canceled out higher profits achieved by JCC’s businesses. This had caused JCC to record S$ 971 million in earnings in the year 2016, a slight increment from 2015.

In 2017, Permata Bank has reduced its loan-loss provisions and thus, resulted in a return to profitability. Astra had achieved higher profits in 2017 as most of its businesses had sustained improved performances in the year. This had contributed positively to JCC as JCC had recorded S$ 1.12 billion in earnings in 2017.

Source: Annual Reports of Jardine Cycle & Carriage

#4: Balance Sheet

As at 31 March 2018, JCC has reported having non-current liabilities of US$ 3.61 billion. Its debt-to-equity ratio works out to be 26.3% which is relatively at low and manageable levels. It has a healthy current ratio of 1.16 and a cash reserve of US$ 2.55 billion, thus, enabling it to continue to make investments and reward its shareholders with stable dividends in the future.

Source: Annual Reports & Quarter Report of Jardine Cycle & Carriage

#5: Future Prospects

The board did not offer discussions about JCC’s future prospects in length and in great detail.

#6: Valuation

As I write, JCC is trading at S$ 34.43 a share.

In 2017, JCC had recorded S$ 2.82 in earnings per share (EPS). Hence, JCC’s current P/E Ratio is 12.21. As at 31 March 2018, JCC has reported net assets a share of S$ 21.86 (based on USD 1:SGD 1.32). Therefore, its current P/B Ratio is 1.58. In 2017, JCC has paid out S$ 1.18 in dividends per share (DPS). If JCC is able to maintain its DPS at S$ 1.18, then, its expected dividend yield works out to be 3.43%.

#7: Investors Relation

For further enquiries or to request for additional investment information on Jardine Cycle & Carriage Ltd’s Investors Relation matters, you may contact:

Jeffrey Tan Eng Heong
Designation: Company Secretary

Telephone: +65 6470 8111

Email: corporate.affairs@jcclgroup.com

Website: http://www.jcclgroup.com/investor-relations/overview/

#8: Major Shareholders

As at 9 March 2018, Jardine Strategic Holdings Ltd is the largest shareholder of Jardine Cycle & Carriage Ltd with 75.00% shareholdings of the company.

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