DBS started Jardine Cycle & Carriage at Buy with a S$43.10 price target, saying the stock offers a unique exposure to Southeast Asia’s economies and to diversified industries.
It noted that Jardine C&C also has a strategic 50.1 percent stake in Astra International, which is Southeast Asia’s largest automotive group.
“Through Astra International, JCC is exposed to various diversified industries and has a strong regional automotive presence through its Direct Motor Interests operating in Singapore, Malaysia, Myanmar and Vietnam,” DBS said in a note last week.
In addition, “JCC is exposed to a variety of industries including financial services, heavy equipment, mining, construction and energy, agribusiness, infrastructure & logistics, information technology and property,” it said.
“JCC also offers exposure to Thailand and Vietnam through its Other Strategic Interests, namely Siam City Cement (SCC), Refrigeration Electrical Corporation (REE) and Vietnam Dairy Products Joint Stock Company (Vinamilk), which are market leaders in their respective industries,” DBS said.
Jardine C&C offers an inexpensive way to play on Astra, which DBS rates at Hold with a 8,775 rupiah target, the bank said.
It noted that while Astra’s shares have priced in the positives, Jardine C&C’s shares trade at around a 22 percent discount to forward price-to-earnings compared with Astra, which is above the 10-year average discount of 15 percent. Astra contributes around 80 percent of Jardine C&C’s underlying earnings, it said.
Jardine C&C also trades at a “deep” around 25 percent discount to the estimated value of its holdings, DBS said, adding the around 3 percent dividend yield was “decent.”
Shares of Jardine C&C ended Friday up 1.70 percent at S$35.88; Astra International shares were down 0.30 percent at 8,350 rupiah.