Surprise... surprise... I didn't realise that J C&C is the cornerstone of the Jardines...
I only hated myself to have sold my rounded rights issue @ $5 shortly post the 2003 rights and left 1 share until recently to revisit the success stories of the Taipan since then...
GG
http://www.economist.com/news/business/2...turn-china
Jardine Matheson
Return to China
A grand old trading house seeks a new propellant
Jul 4th 2015 | SINGAPORE | From the print edition
EACH day on the dot of noon, a former naval artillery piece is fired from a platform at the eastern end of Causeway Bay in Hong Kong. Pulling the trigger is one of the 430,000 employees of Jardine Matheson, a British-run and family-owned conglomerate with interests in retail, property and carmaking. The ceremony harks back to Jardines’ origins in the 1830s as an intrepid tea-and-opium trader, and is usually attended by a gaggle of tourists. It is an oddly public display by a firm that otherwise prefers to pass unnoticed.
Over the past decade few Asian conglomerates have performed as consistently as Jardines. Propelled by a well-timed expansion into South-East Asia, the group’s revenues have risen by about 18% annually since 2005. As the chart shows, the performance of its main listed vehicle since Britain’s handover of Hong Kong to China in 1997 has been strong even compared with that of two other successful “hongs” with roots in colonial times: Swire and Hutchison Whampoa. (The latter has just merged with Cheung Kong, another of Li Ka-shing’s companies, to form CK Hutchison.) It is a sharp contrast to Jardines’ sickly state at the turn of the millennium, when some of its investments in Britain had done poorly, and its future was unclear following the Hong Kong handover. The question is whether, now that Asian growth rates have fallen, it can find new ways to grow.
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Jardines owns Mandarin Oriental, a chain of hotels, and its companies run some Asian branches of Pizza Hut, KFC and IKEA. It said last month that it would open the first Pizza Huts in Myanmar, bringing a slice of modern civilisation, such as it is, to the long-isolated Burmese. But most of its profits come from only three of its firms. Hongkong Land’s property portfolio includes many valuable sites in the territory’s central business district. Dairy Farm, a retailer with interests across East and South-East Asia, owns among other things the Wellcome, Giant, Cold Storage and Hero supermarket chains. Jardines’ crown jewel is Astra, an Indonesian vehicle-maker and palm-oil producer, in which it began building a stake in 2000 and which it now controls. Astra accounts for roughly half of the group’s revenues, and its stellar growth helped underlying profits at the group’s two main listed vehicles—Jardine Matheson Holdings and Jardine Strategic—roughly to triple in the five years to 2010.
It seemed a gamble at the time, but in retrospect buying into Astra was a far-sighted bet on Indonesia—a sprawling country of 250m people that continues to fox many multinationals—just as aftershocks from the Asian financial crisis had made its firms look cheap. Analysts say Jardines seems a more disciplined investor than others: it tends to buy small chunks of companies in a fairly narrow range of industries, before expanding its ownership of the spriteliest ones. By contrast with their peers at Swire, executives at Jardines prefer not to get involved with the day-to-day running of their subsidiaries, concentrating instead on broad strategy. They pay good money for companies that are already well-run: Gerald Wong, an analyst at Credit Suisse, says many of the group’s firms are “best in class”.
Keeping it in the family
Jardines’ run of success until recently bought the group respite from once-fiery battles with outside investors over the Keswick family’s continuing control. Ben Keswick, its managing director, is a descendant of one of the firm’s Scottish founders. The Keswicks are among the last of a once-crowded field of upper-class British families who run firms set up by their Georgian and Victorian forebears.
The family are said to train their youngsters energetically, but not to coddle princelings who disappoint. Networks built during generations of hobnobbing have probably helped the Keswicks to spot and seize opportunities more swiftly than competitors. But keeping the family at the helm has required controversial contortions. In the mid-1990s, amid fears of what might follow after the handover of Hong Kong, Jardines switched its Asian stockmarket listings from there to Singapore. In the early 2000s some shareholders waged a noisy yet unsuccessful campaign to unwind a convoluted corporate structure that helps to keep the Keswicks in control.
There was much less fuss when the issue arose again last year, as new rules in Britain prompted the group to downgrade its London listing from “premium” class to “standard” (an indication of compliance with regulatory and governance standards). However, the agitation could return if a recent flattening of Jardines’ profit growth starts to look permanent. In the past few years its food businesses have been hit by rising wages and increased competition. A bigger concern is Indonesia’s slowing economy. The end of a commodity boom has reduced demand for the cars and agricultural and mining machinery which Astra produces. The largest impact, though, has come from the plummeting rupiah. In March it reached a 17-year low against the American dollar, in which Jardines compiles its accounts.
Recent acquisitions may help Jardines to return to growth. In April it spent $615m acquiring a 25% stake in Siam City Cement, a Thai firm, perhaps hoping that Thailand’s military government will get going on some big, long-promised public-works projects. But lately its biggest bets have been in mainland China. At the start of 2014 the group took a 20% stake in Zhongsheng, a Chinese car dealer, for $731m. Last summer Dairy Farm paid $925m for a one-fifth stake in Yonghui, a chain of supermarkets. That was Jardines’ biggest acquisition by value in at least a decade.
Bulking up in China pleases analysts who worry that Jardines has become overexposed to Indonesia. The risks are not just to do with the weakness of the Indonesian economy or the prickly nationalism of its government; campaigners worried about the environmental impact of Astra’s palm-oil plantations in Indonesia have lately taken to demonstrating outside Jardines’ Mandarin Oriental hotels around the world. Last month Astra promised to stop clearing forest to make way for plantations.
Well-read Chinese will be aware that Jardines’ 19th-century founders lobbied hard for Britain to wage the first Opium War against China, over its attempt to curb imports of the drug by Jardines and other traders. But any lingering animosity—from that, or from the war of words that preceded the firm’s move to Singapore—does not appear to have held up Jardines’ recent big deals on the Chinese mainland. And the group has proved deft at navigating economic nationalism in Indonesia, where Astra is considered a local success story. Jardines’ long history is far more an asset than a liability, thinks Jonathan Galligan, an analyst at CLSA, a stockbroker: “They don’t make the same mistakes twice.”
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