Jardine Matheson Holdings, through Jardine Strategic Singapore (JSS), has bought 150,400 shares in Jardine Cycle & Carriage C07 -0.86% from the market at $26.4576 apiece.

 

The purchase was conducted on April 23 for a total consideration of $3.98 million.

 

Following the purchase, Jardine Matheson Holdings J36 0.55% has a deemed interest of 79.017% in Jardine Cycle & Carriage, up from 78.979% previously.

 

For the FY2023 ended Dec 31, 2023, Jardine Cycle & Carriage reported earnings of US$1.22 billion ($1.65 billion), 64% higher y-o-y. Earnings per share (EPS) also rose by 64% y-o-y to US$3.08 for the year.

CITI Research initiated coverage on Jardine Cycle & Carriage : C07 +0.93% (Jardine C& C) with a &ldquo buy&rdquo call, as the research house expressed optimism on the conglomerate&rsquo s investments in South-east Asia, particularly Vietnam.

 

The research house&rsquo s price target of S$29 represents a 25 per cent discount to an estimated FY2024 net asset value (NAV) of S$38.24 per share, which was derived from a sum-of-the-parts methodology and based on the stock&rsquo s historical average. 

 

In a report on Sunday (Apr 7), Citi&rsquo s research team highlighted Jardine C& C&rsquo s share price decline of about 30 per cent since May 2023, along with a widening of its discount to NAV to 36 per cent from 4 per cent. 

 

It therefore recommends that investors accumulate the stock at current levels, in view of the research house&rsquo s projections for the group&rsquo s net profit for FY2024 to FY2026 to increase by a compound annual growth rate of 7 per cent. 

 

While Citi believes the group&rsquo s holding company Astra remains its main profit driver, the research house said it also foresees profit contributions from the non-Astra businesses to increase to 26 per cent in FY2026 from 16 per cent in FY2023. 

 

This growth will be mainly driven by the group&rsquo s investments in Vietnam, which will be in part supported by Astra&rsquo s stability as the main profit contributor going forward. 

Citi is especially positive on Jardine C& C&rsquo s investments in Vietnamese vehicle manufacturer Truong Hai Group Corporation (Thaco), which is estimated to contribute to 44 per cent of the profit growth. 

 

&ldquo We believe Thaco can ride on the agricultural tailwind with its increasing investment into the segment, as well as the recovery of its automotive segment on Vietnam&rsquo s middle-class expansion,&rdquo said the research house. 

 

Jardine C& C&rsquo s investments in Vietnam-listed Refrigeration Electrical Engineering Corporation (REE) is also expected to contribute to about 17 per cent of the growth in profit. 

 

Citi further expects REE to develop its renewable energy projects for future earnings growth, noting that it has a &ldquo steady&rdquo income stream from its office-leasing business.

 

&ldquo Jardine C& C has consistently delivered an attractive dividend yield, at around 6.6 per cent to investors, with a stable dividend payout of around 40 per cent,&rdquo added Citi.

 

&ldquo At the same time, the consistent profit contribution from Astra provides Jardine C& C with the financial stability to participate in Vietnam&rsquo s high-growth trajectory through holdings in market-leading companies like Thaco and REE.&rdquo  

On Mar 15, Jardine Cycle & Carriage : C07 -1.42% (Jardine C& C) group managing director Benjamin Birks bought 11,000 shares at S$24.31 per share. With a consideration of S$267,410, this increased his direct interest in the South-east Asia investment holding company of the Jardine Matheson Group from 44,000 shares to 55,000 shares. This represents a 0.01 per cent direct interest in the company.

 

His previous acquisitions were in March 2021, with 25,000 shares acquired at S$22.77 per share, and in August 2023, with 19,000 shares purchased at S$33.90 per share.

 

Birks leads the long-term portfolio strategy of the group, which includes having direct oversight over the sustainability strategy. In February, Jardine C& C reported that its FY23 (ended Dec 31) attributable profit increased 64 per cent from FY22 to US$1.2 billion. This was principally attributed to Astra&rsquo s second year of record profit, despite softer commodity prices and moderating growth in the second half of the year.