Jardine Cycle & Carriage

I have collated all the major news on Jardine C&C and you can have a feel on how media can sensationalise the impact of a emotionless computer arbitrage trading between rights and the mother share that wipe out more than S$ billion off market cap of J C&C as a result of a meagre $0.4m of "riskless gains":

DBS Upgrades Jardine Cycle After Rights Plan -- Market Talk
145 words
30 Jun 2015
Dow Jones Institutional News
DJDN
English
Copyright © 2015, Dow Jones & Company, Inc.
0902 GMT [Dow Jones] DBS Vickers Securities upgraded Jardine Cycle & Carriage (C07.SG) to hold from fully valued but cut its target on the company to S$34.50 from S$37.70 after the auto seller announced a rights issue. "We estimate that the rights issue will improve the group's net gearing...[and] allow the group to make more acquisitions," DBS said in a statement. However, the weak outlook for its Indonesian unit Astra International remains a key challenge for Jardine Cycle's near-term prospects, DBS said. Its shares are up 0.3% at S$33.24 (US$24.69), while the local benchmark FTSE Straits Times Index is up 1.2%. (gaurav.raghuvanshi@wsj.com)

Editor: FLS

Jardine Cycle & Carriage Could be Headed for 4.5-Year Low -- Market Talk
192 words
1 Jul 2015
Dow Jones Institutional News
DJDN
English
Copyright © 2015, Dow Jones & Company, Inc.
0804 GMT [Dow Jones] Singapore-listed Jardine Cycle & Carriage (C07.SG) could be headed for its lowest level since early 2011, following a further 3.1% fall in Wednesday trading. A rights issue announced two weeks ago, which is feared to dilute the stock, has caused the company's shares to fall to 32.07 Singapore dollars a share. Jardine's previous low in this territory was back in September 2013 when it hit S$31.51, and 2011 before that. The losses have, however, generated some value-interest from analysts. "Further weakness around the rights may provide an entry opportunity," JP Morgan says in a note; it says it now prefers Jardine C&C rather than its Indonesia subsidiary Astra International (ASII.JK), because Jardine C&C has diversified its businesses and forecasts that non-Astra earnings could increase and account for 15% of Jardine C&C's earnings by FY2016. (jake.watts@wsj.com; @jmwatts_)

Editor: CNG

Jardine C&C Falls to 5-Yr Low as Rights Issue Hits Outlook -- Market Talk
149 words
7 Jul 2015
Dow Jones Institutional News
DJDN
English
Copyright © 2015, Dow Jones & Company, Inc.
0329 GMT [Dow Jones] Singapore-listed Jardine Cycle & Carriage (C07.SG) continues to be punished by investors for a rights issue announced last month. The stock falls to a five year low, down in 20 of the 26 sessions since the beginning of June and trading Tuesday late morning at S$29.79 a share. DBS, among research firms covering the stock, argues for a target price of S$34.50 and points out that, while Jardine's rights issue should raise US$768 million and could fund acquisitions, a downturn for Astra International (ASII.JK) in Indonesia--which contributes 90% of the company's earnings--weighs on the stock. (jake.watts@wsj.com; @jmwatts_)

Editor JSM

Jardine C&C is Oversold After Rights Issue: Macquarie -- Market Talk
184 words
8 Jul 2015
Dow Jones Institutional News
DJDN
English
Copyright © 2015, Dow Jones & Company, Inc.
0704 GMT [Dow Jones] Singapore-listed Jardine Cycle & Carriage (C07.SG) is sold down further as investors react more severely to its June rights issue than expected, says Macquarie Singapore head of research Conrad Werner. "I'm scratching my head about why the decline has been so precipitous," he says, arguing that Jardine's exposure to Indonesian auto maker Astra International (ASII.JK), which accounts for 90% of its earnings, isn't as much of a negative as the market would seem to think. "Astra's fundamentals aren't as good as they were in the past," he says, but notes that Astra's own share price has fared better in recent weeks since its results than that of Jardine. Mr. Werner has a target price of 37.60 Singapore dollars a share on Jardine Cycle & Carriage, which compares with its Wednesday trading price of S$29.95. (jake.watts@wsj.com; @jmwatts_)

Editor: JFN

Short Selling Behind Jardine C&C's Price Crash -- Market Talk
143 words
9 Jul 2015
Dow Jones Institutional News
DJDN
English
Copyright © 2015, Dow Jones & Company, Inc.
0502 GMT [Dow Jones] Short-selling likely largely explain the recent sharp slide in the shares of Singapore-listed Jardine Cycle & Carriage (C07.SG), data show. The percentage of Jardine free-floating shares on loan has increased from around 1% in April to 2.7% on Tuesday this week, according to data from Markit, with that percentage remaining elevated throughout much of June and then shooting up shortly after the company announced a large rights issue on June 18. Jardine C&C shares recover by 4.1%, Thursday, trading to S$31.29 each, but have fallen 21% since May 25 when the recent slide began. (jake.watts@wsj.com; Twitter: @jmwatts_)

Editor JSM

(08-07-2015, 09:22 PM)greengiraffe Wrote: Based on my riskless arbitrage theory, I have conducted the following forensic studies:

The rights started trading on 1 Jul and the following are the turnover in units:

Mother shares: 4.924m shares
Rights: 4.721m

The theoretical ex rights price on 24 Jun was $34.21
The day before rights started trading on 30 Jun, mother shares ended at 33.10
Today's intraday low is $28.78
Total JC&C paid up cap is currently 395.236m

Assuming 80% of 4.721m rights were related to algo based arbitrage = 3.776m shares
Average margin of $0.10, the arbitrage profits before SGX clearing is $0.3776m
The mkt cap wipe out from the 30 Jun to today's intraday low is S$1707m

It is amazing how for less than S$0.4m riskless profits, mkt cap in excess of S$1707m can be wipeoff a bluechip and resulting in all sorts of noise and nerve wreck on a stock.

A remiser friend of mine was asking - doesn't watch dog investigate such erratic market movements? Is this part of normal business?

It also bring me back to my broken recorder: What is the investigation outcome of the crash of the 3 msian penny stocks? Is someone sleeping?

Is this part of normal business?

Vested
J C&C

[Modified by Admin : (33.1 - 28.78)*395.236m = 1707m, not 170.7m as stated previously by GG]

(07-07-2015, 06:16 PM)greengiraffe Wrote: Its computer driven algo trading...

Once the computer long the rights, it will just sell the mother shares with borrowed scripts which will be return once the rights are subscribed.

U can see the fairly constant trading spread between the rights and the mother shares.

There are plenty of big bank backed traders that are using their computer trading systems to get this riskless arbitrage.

On ASX, such a phenomenon seldom exists as rights are non renounceable.

Rights trading last day on Thursday.

J C&C steep decline started when rights were first announced and when actual rights trading started, all hell break loose. Trading volume is also extraordinarily high.

Many companies with rights issues have experienced such selloff before.

Basically, its human against computers and in a relentless decline, negative sentiment and hence all sorts of justifications emerges and hence feed through to the vicious cycle.

Don't believe too much in my conspiracy theories. Do check against Astra and JC
&C share price over last 5 yrs via bloomberg.

Trading Vested
GG

Very interesting.. anyway by pushing down the price so quickly in such a heavy, institutional stock, shortists have created a rare opportunity of higher MOS in this counter - as it inches up, the MOS becomes smaller and smaller, would be interesting to see how Mr Market finds back the right price. This also shows the importance of holding cash to take advantage of such situations as it arises.

What ought to be it's fair value now? Considering that it hasn't rebounded very much relative to it's fall from grace, there ought to be money to be made here still?

There may be another round of selling. For those who stretch themselves to exercise the right, they may need to liquidate. Del monte, china fishery, for example, fall below right after the Right share become exercisable. Jardin c&c may not drop so much as the right ratio is smaller

The counters that u mentioned are those in the dog houses - companies that need to raise cash to repair balance sheet.

Mercedes in this case is a rare opportunity to ride with the Taipans - they are the ones that gave the go ahead to get into a new business buying out an attractive business that is deemed non core to a merged and enlarged group.

They mgt to squeeze out a very good price when Holcim sells (350 vs 434).

All the history on the Taipan's track record in Mercedes are there. One just need to read up and have confidence in them repeating their track record hopefully within the next decade.

For traders, you guess is as good as mine.

Vested
GG

(10-07-2015, 12:38 PM)DCF Wrote: There may be another round of selling. For those who stretch themselves to exercise the right, they may need to liquidate. Del monte, china fishery, for example, fall below right after the Right share become exercisable. Jardin c&c may not drop so much as the right ratio is smaller

31.8 vs 28.78 +10.5% from spike bottom - not a lot?

I think those who bought below $30 already v happy.

GG

(10-07-2015, 11:30 AM)MINX Wrote: What ought to be it's fair value now? Considering that it hasn't rebounded very much relative to it's fall from grace, there ought to be money to be made here still?

Yea this rebound is very fast and furious as GG pointed out it could be due to rights arbitrage play which the ang mo funds knew they can control the game. I did staggered buying from 33-30.xx after XR. XR close price was $35.1.

JC&C is not a peanut company like China fishery etc. It did have cash over excess of $1billion. What's more, her parent JSH has to fork out over SGD700mil cash to subscribe for the rights. This is not 7mil or 70mil dollars, it's over 700,000,000.

JC&C used to trade around P/E 14-16x and 2.6x book value @ $47. It went to 1.7 book value. The lowest P/E lvl was about 10 at 29.xx

My Avg now is 32.3 which is very near. At the worst price point, my paper loss was 5k and now reduced to 600.

Still holding on to some odd lots of Jardine C&C bought in 31.08.2006 at S$4.60, some at $7.90 from March 2007.
I did go for the recent rights too.

You have done very well buddy. By now your shares are already free. I regret selling my rounded right issue for quick profits the last time round.

(10-07-2015, 06:52 PM)edragon Wrote: Still holding on to some odd lots of Jardine C&C bought in 31.08.2006 at S$4.60, some at $7.90 from March 2007.
I did go for the recent rights too.

hi greengiraffe,

you mentioned that you're vested in this counter as 'Trading Core'. At what price do you intend to sell or you'd think is fair value. i bought in at 31.8 and feel that fair value at current situation should be about 35 thereabouts, not including of any M&A catalysts in the future. Just wanted to have another shareholder's perspective.