Jardine Strategic

Jardine Strategic: JPM starts at at Underweight with TP US$30.00, viewing its value proposition as more nebulous vs other Jardine group plays. Says JS appears to trade at a wide holding-company discount, with its Jardine Matheson stake equal to its market cap and its Mandarin Oriental, Dairy Farm , Hongkong Land and Jardine Cycle Carriage stakes carried at negative values. However, the house notes JS's cross holding with JM complicates a read-through of value, and renders it less attractive to investors, without the comfort of yield. Notes JS owns 55% of parent JM, which owns 82% of JS, while the dividend-payout ratio and yield are low at 16% and less than 1% respectively. Adds, JS isn't very liquid with 18% free float and $6 m average daily trading . As float declines and liquidity thins, worries that the set of institutions able and willing to invest in JS may thin. While JS is a candidate to be folded into another group arm longer term, JPM believes it's unlikely near term, but adds its Underweight call is threatened by the possibility JS could be used as an acquisition vehicle.