Jardine Cycle & Carriage

[weijian]

At JC&C holding level, it has way more cash flow for servicing the loan interest. Cashflow is mainly use for 1) interest payment, 2) dividend payment & 3) investment( usually adding on to current investees). #2 & #3 are adjustable, and JC&C has been adjusting over the years. Next while JCC holding level cashflow(dividend received) is not sustainable at certain level, it is in my view sustainable because the underlying investees are all quality businesses. Ie cash will keep flowing in. So, while there is some restriction in the allocation of capital, their hands are not tied. Forget about JC&C being forced to do a right.

As Jardine SE Asia investing arm, JC&C main job is to buy a sizable interest in promising companies. Eg, their current holdings (1 Thai, 2 Indo and 3 Vie) so in my view, JC&C need to raise capital because it does not have extra capital for sizeable investment. It is a question of not if but when, and this question will be partly answered by JMH(JMH must be capital ready) since it owns 75% of JC&C. The other part is unknown, what are JC&C targets.

As for the debt being refinanced, you can actually see it in the company level B/S and notes.

We are finally seeing some reduction of the 1.5bil debt at company level.

The details were not detailed in FY22 results and slides. But it was elaborated in the company's analyst briefing - Basically ~600+ million of debt is now at current liabilities and will be paid off with the sales/leaseback of C&C Spore properties + retaining some of the Astra's "enhanced" dividend payout.

FY22 analyst briefing:
https://media.idigitalcontents.com/media...tation.mp4

[weijian]

I have to admit that I thought Carro would go belly up in 2023-2024. But with the admission of JCC's money and complimentary capabilities, they have demonstrated me wrong. They also probably have more legs to run. It seems like JCC is trying replicate "Astra Automobile" full suite of services in Spore/Msia.

Jardine C&C and Carro enter strategic partnership for used cars and aftersales

MAINBOARD-LISTED Jardine Cycle & Carriage : C07 +0.41% (C&C) and used-car tech platform Carro announced a strategic partnership worth “over US$60 million” on Friday (Jun 16).

Under the partnership, Carro will acquire a stake in Jardine’s used-car subsidiary, Republic Auto, while Jardine C&C will acquire a stake of equal value in Carro.

Foo said the partnership will help Jardine C&C’s plans to go beyond car wholesale and retail, and into a “larger ecosystem” that includes financing, insurance and aftersales. Tan said that Carro will benefit from Jardine’s “strong networks and deep understanding of the region” to help stay ahead of its competitors.

https://www.businesstimes.com.sg/compani...aftersales

[weijian]

Been JCC's principal brand and mfg partner in Indonesia, Toyota's belated entry into EV is kinda "nerve-recking" for JCC OPMIs. This is in view that Indonesia is moving towards building its supply chain for EV battery within the country, paired with the opportunity of the ASEAN FTZ.

But since James Dyson has said that there is no first mover advantage for EV mfg (when he abandoned doing it in Spore), we can probably hope for the Japs to gather their mojo.

In EV battle, Toyota bets on new technology and old-school thinking

Under new CEO Koji Sato, Toyota in June announced an ambitious plan to ramp up battery EVs, a big shift after years of criticism that the maker of the industry-leading hybrid Prius was slow to embrace fully electric technology.

https://www.businesstimes.com.sg/compani...technology.

[weijian]

The total investment cost for SCC inclusive of the initial/subsequent purchases and rights subscription is ~752mil usd. If we disregard the dividends, the 346mil usd sales tag is ~50% loss over the last 7-8years. And it is worsen by the fact that the funds were paid for via equity fund raising.

PROPOSED SALE OF INVESTMENT IN SIAM CITY CEMENT PUBLIC COMPANY LIMITED

Jardine Cycle & Carriage Limited (“JC&C”) wishes to announce that it has today entered into a sale and purchase agreement (the “SPA”) with Sunrise Equity Co., Ltd. (the “Purchaser”) for the proposed block trade sale (the “Proposed Sale”) of 76,107,368 shares in Siam City Cement Public Company Limited (“SCCC”) held by JC&C (the “Sale Shares”), representing JC&C’s entire 25.54% shareholding in SCCC. SCCC is an associated company of JC&C and listed on the Stock Exchange of Thailand (“SET”). The Purchaser is an existing shareholder of SCCC and is part of the Ratanarak Group which is the controlling shareholder group of SCCC holding an aggregate 46.35% interest in SCCC.

The aggregate consideration for the Proposed Sale is THB12,177,178,880 (approximately USD346 million) at THB160 per Sale Share (the “Consideration”), arrived at on a willing-buyer, willing-seller basis, having regard to the prevailing market price of SCCC shares as quoted on SET. As at 15th August 2024 (being the market day immediately preceding this announcement), the closing market price of an SCCC share was THB141.

https://links.sgx.com/FileOpen/Attachmen...eID=816074

[Shrivathsa]

Well, on the bright side, at least they sold out of a bad investment .

Guess the money will be used to retire their debt.

For what it is worth, it is likely that JMH will absorb JC&C like the merger of JSH and JMH.

Reduces a layer of complexity for Jardine

[weijian]

Well, on the bright side, at least they sold out of a bad investment  .

Guess the money will be used to retire their debt.

For what it is worth, it is likely that JMH will absorb JC&C like the merger of JSH and JMH.

Reduces a layer of complexity for Jardine

Hi Shrivathsa,

After (a decade?) of underperformance, the Jardines may have realized it is time for a change - especially on the "governance side of things" - So that could have largely explained the un-winding of JSH and JMH in 2021, and what subsequently followed - new INDEPENDENT directors and outsiders with relevant experience across all their listed subsidiaries.

While JMH has increased their stake in JCC in the past few years, I see it as more opportunistic than anything else. That is, JMH sees the additional stake as accretive to their own earnings (similar to the rationale for OCBC's bid for GEH) rather than "reduces a layer of complexity". While it make sense to reduce the layer of complexity at JSH-JMH level for governance sake, the current structure for JCC-JMH is perfectly ok in the ordinary course of events.

So even if JMH eventually takes over JCC, the reason will not be "reducing a layer of complexity". If history is any guidance, then we could probably refer to OCBC-GEH.  Back in 2006, OCBC made an offer and raised its stake from ~83% to 88%. After a series of buy-ins since 2004, we can't blame everyone from speculating on the inevitable.

P.S. I wonder if the Wee family's crossholding structure will unfold now that Wee Senior has passed on. Their banking franchise is strong and striving, so probably more years ahead.