Jardine Matheson / Jardine Strategic

Jardine Matheson / Jardine Strategic: Nomura initiates coverage on JM and JS with Buy ratings with TP $65 and $39 respectively. Likes Jardine’s Asia-focused strategy and long operating history which have resulted in a portfolio of high quality assets (controlling stakes in Astra, HK Land, Dairy Farm, Jardine Motors and others) that are leveraged to Asia’s domestic demand. Notes these assets are underpinned by structural trends in Asia, including rising domestic consumption (via Dairy Farm’s 5,400 outlets), low auto penetration (via Astra in Indonesia and Jardine Motors in China), and lack of new office supply (HKL). Believes near-term earnings slowdown in 2012F owing to Astra and HKL, was well-flagged by mgt and should already be discounted by the market, and investors will likely look beyond 2012 and focus on the secular long-term growth profile. Projects recurring EPS CAGR to re-accelerate to 15% over 2012F-14F. Says valuation for JM/JS at 12x 12F EPS and 36%/51% NAV discounts are more compelling than their listed units – Dairy Farm (26x 12F P/E), HK Land (38% NAV discount) and Astra (14x 12F P/E). Nomura tips a slight preference for JM to JS owing to the former’s better stock liquidity and higher dividend yield.