Jardine Cycle & Carriage

[specuvestor]

IIRC HK price inflation is through the car parks. You need to have a car park rather than COE

hence the dynamics is not directly similar to Singapore system

[zerobeta]

In fact sg is going this direction of HK past 5 years. Despite the growth of our car population, the no of toyota cars sold here have remained the same, Honda and Hyundai are diminishing, but Audi, BMW and Mercedes car sales have increased over the 5 years.

growth of car population? i thought car sales in SG has been consistently declining every year?

anyway in regards to JCC, it's probably not relevant to discuss car market in SG since non Astra contribution to total profit is <5%.

[psslo]

Ricky,

I was evaluating JC&C last year with a view to initiate a position and had the same question. JCC has a 50% share of Astra, so get the mkt cap for Astra & divide by 2, then compare with JCC mkt cap. I found at that time that it is about 17% cheaper buying JCC's share of Astra than Astra directly. Of course, JCC has shot up a bit since then, so you have to redo the analysis yourself. It is also interesting to super imposed both JCC & Astra share charts together since 2009. You can see how the gap between Astra & JCC widen over time. Hope that helps.

I believe it may cheaper if you buy Jardine C&C vs Astra directly. Just compare the market cap for a quick estimate.

as Cyclone as put it, this company has very good fundamentals... wondering why its coverage is very small?

94% of its underlying profit is from Astra, its stake on Astra forms around 97% of its market cap.

poor results in 2013 mainly due to earning translation from IDR to USD (Astra reported in IDR, JCC in USD).
Underlying profit at Astra in IDR term was flat in 2013. It was actually a good performance considering 2013 was a very challenging year amidst weak commodity price (coal and CPO) (Astra has 25% exposure into commodity). So with commodity rebounding, there is a good chance for a turnaround.

Question is, if it's better to invest into Astra directly since Astra doesn't have exposure into Singapore and Malaysia unlike JCC. Singapore and Malaysia auto sector are not good in the long term due to government measures to curb private vehicles (for Singapore) and stiff competition especially against government brand Proton (for Malaysia). There's also no headache from currency translation if we invest into Astra directly.

Thoughts?

how it is cheaper, could you please elaborate? thanks

[cyclone]

Proposed Renounceable Underwritten Rights Issue to Raise approximately US$772 Million
- renounceable underwritten rights issue
- 1 rights share for 9 existing ordinary shares
- issue price of S$26.00 per share
- a discount of approximately 27.9 per cent. to the closing price of S$36.06 on 18 June 2015
- theoretical ex-rights price of S$35.05 per share
- last day of shares traded "cum-rights" : 23 June 2015
- commencement of trading of Nil-Paid Rights : 1 July 2015 at 9.00 a.m
- bulk of the proceeds (approximately S$1.0 billion) will be used to repay loans

Rationale :
On 2 April 2015, the Company acquired a 24.9 per cent. interest in Siam City Cement Public Company Limited from Thai Roc-Cem Ltd., a wholly-owned subsidiary of Holcim Ltd, for a total consideration equivalent to some US$615 million, following which Siam City Cement became the Company’s associated company.
To fund the SCCC Investment, the Company had drawn down US$626 million by way of (a) US$313 million on a US$325 million term loan facility from The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch and (b) US$313 million on a US$325 million term loan facility from the Bank of Tokyo-Mitsubishi UFJ, Ltd. Singapore Branch on 1 April 2015. The Company is proposing the Rights Issue to raise proceeds (i) to repay the Term Loans, (ii) to repay certain short-term indebtedness of the Group, and (iii) for general corporate purposes including making strategic investments and/or acquisitions.

[opmi]

One of the best capital allocators/business mgt wants to raise equity to pay off loans. It is a signal.

[Hill]

Hello Bro OPMI
I m still trying to learn and understand, is this a good or bad signal?

[opmi]

Hello Bro OPMI
I m still trying to learn and understand, is this a good or bad signal?

My guess is Jardine wants to reduce debts at company level. Can be safeguarding
against the economies it is operating in and/or the tightening credit markets.

[Shrivathsa]

One problem I feel is that this will lead to odd lots, with the ratio of 1:9 being proposed.

For a large investor, who has 900 shares i.e. around 36K, it would not be an issue, for a small investor with one lot, i.e. 3.6K, this will be an issue.

[Contrarian]

At Annual Report 2014, The company's gearing excluding financial business is 2%.

When interest rates are still not expected to go up significantly, I find it strange they would want to raise funds. Especially when their equity is > US$10bn.

[donmihaihai]

At Annual Report 2014, The company's gearing excluding financial business is 2%.

When interest rates are still not expected to go up significantly, I find it strange they would want to raise funds. Especially when their equity is > US$10bn.

Jardine C&C is a conglomerate with listed subsidiaries, associates and investments and non listed of the same. For example funds from Astra can only be flow upward in a proper way. Astra by itself is another conglomerate. B/S of these kind has to be broken down.

So is it that the non-listed segment that is in need of fund or it is just that Jardine is trying to get more shares in Jardine C&C or both.