Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

In my prior insight <a href="https://skr.ma/h4f6C" target="_blank" rel="noopener">Jardine Matheson: Lessons in Dissent</a> on the 29 April, I thought <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> was unattractive at a 13% discount to NAV, plus near-term news may focus on <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a>'s dissension rights, and Matheson's potential exposure thereon.
Matheson is down ~15% since that note (while the Straits Times Index is down ~4%). 
Since that insight, Matheson released its <a href="https://www.jardines.com/assets/files/NewsAndEvents/corporate-press-releases/jardine-matheson/int21.pdf" target="_blank" rel="noopener">interim results</a>, which not only provided clarity on the net debt at the parent level, which was largely guesswork amid the Matheson/<a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> circularity; but also unlisted stub ops - especially Jardine Motors - performed exceptionally in the 1H21.
At a ~23% discount to NAV on adjusted historical NAVs, value is emerging. Yet Matheson is not an obvious buy here.
More below the fold.

In my prior insight Jardine Matheson: Lessons in Dissent on the 29 April, I thought Jardine Matheson Holdings (JM SP) was unattractive at a 13% discount to NAV, plus near-term news may focus on Jardine Strategic Holdings (JS SP)'s dissension rights, and Matheson's potential exposure thereon.
Matheson is down ~15% since that note (while the Straits Times Index is down ~4%). 
Since that insight, Matheson released its interim results, which not only provided clarity on the net debt at the parent level, which was largely guesswork amid the Matheson/Jardine Strategic Holdings (JS SP) circularity; but also unlisted stub ops - especially Jardine Motors - performed exceptionally in the 1H21.
At a ~23% discount to NAV on adjusted historical NAVs, value is emerging. Yet Matheson is not an obvious buy here.
More below the fold. 

Jardine Matheson: Value Gradually Emerging Four Months On

Last Week in Event SPACE: Jardines, Xiaomi, Tilt Renew, Kumho Petro, Kunlun Energy, Takeei/Rever

Last Week in Event SPACE: Jardine Matheson/Strategic, Xiaomi, Vocus Comms, Sanken Electric, Cocokara

Since <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>'s surprise <a href="https://links.sgx.com/FileOpen/JMH%20J.ashx?App=Announcement&amp;FileID=651169" target="_blank" rel="noopener">announcement</a> earlier this week to acquire the 15.11% in <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> it does not own, I've fielded numerous questions concerning:
<ul>
<li>Who is entitled to vote at the forthcoming shareholder meeting for Strategic?</li>
<li>What rights do minorities have if they object to the Offer?</li>
<li>Why is there not a shareholder meeting for Matheson shareholders to vote on the acquisition of Strategic?</li>
<li>What is an effective economic interest in a cross-holding?</li>
</ul>
This insight answers these questions, among others.
Shareholders may feel aggrieved - and Matheson is getting Strategic for a bargain if simply eye-balling the long-term price chart.
But the risk to holding Strategic has been present ever since the Jardine's group moved the primary listings of their companies to the UK's Standard Board in 2014 from the Primary Board. 
For a more detailed run-through of the transaction itself, please refer to <a href="https://skr.ma/p6cqh" target="_blank" rel="noopener">Jardine Matheson: Collapsing The Circularity</a>.
More below the fold.

Since Jardine Matheson Holdings (JM SP)'s surprise announcement earlier this week to acquire the 15.11% in Jardine Strategic Holdings (JS SP) it does not own, I've fielded numerous questions concerning:

Who is entitled to vote at the forthcoming shareholder meeting for Strategic?
What rights do minorities have if they object to the Offer?
Why is there not a shareholder meeting for Matheson shareholders to vote on the acquisition of Strategic?
What is an effective economic interest in a cross-holding?

This insight answers these questions, among others.
Shareholders may feel aggrieved - and Matheson is getting Strategic for a bargain if simply eye-balling the long-term price chart.
But the risk to holding Strategic has been present ever since the Jardine's group moved the primary listings of their companies to the UK's Standard Board in 2014 from the Primary Board. 
For a more detailed run-through of the transaction itself, please refer to Jardine Matheson: Collapsing The Circularity.
More below the fold. 

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Yesterday <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> published its annual results in which it disclosed the NAV was 58.22 USD on 31/12/20. Contrast this with the 33 USD buyout offer tabled earlier this week. Something is seriously off here. Before one goes any further,<a href="https://www.jardines.com/assets/files/Investors/Reports/strategic/js-ar2019.pdf" target="_blank" rel="noopener"> please re-read the Corporate Governance (pages 136-141) of Jardine Strategic's 2019 annual report.</a> It will be good to contrast what is written there with what is happening in real-life.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/193/684/original/image_59443962741615508974779.png?1615508975" class="editor-image img-responsive" data-smartkarma-image-id="193684"></figure>The buzzword "du jour" for all investors is ESG. For the avoidance of doubt this stands for:Environmental, Social, and Governance.In the currently proposed buyout of <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> by <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> the entire board of both companies (largely the same people) is showing the investment community what it really thinks about the G in ESG. Given the transaction was advised by both <a href="https://www.smartkarma.com/entities/jpmorgan-chase-co" target="_blank" data-smartkarma-citation="entities:277:1" rel="noopener">JPMorgan Chase &amp; Co (JPM US)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a> we now also know how "ingrained" the ESG ethos is in practice at those banks.Given the +/-85% ownership of Jardine Strategic by Matheson, one would expect that Matheson could not vote on the proposed transaction and only Jardine Strategic minorities would have an actual vote to deem this offer "fair and reasonable" and give it their thumbs up/down at an SGM. Not in this case. Matheson is intending to use its 85% votes to "ram" this offer across the finish line. Which explains why Matheson expects this deal to close by the end of April 2021. Some changes take decades at Jardine, others clearly don't.It is astonishing that not a single person in these large banking institutions has stood up to Jardine's board and challenged them on the "fairness", "correctness" and "governance" of its proposed 33 USD offer. It is not because you have found some loophole, as made clear by David Webb, in your byzantine listings between Bermuda-Singapore-London that you are required to put your "Gangster" hat on and use it. The "Governance" hat could have been used, a fair buyout of Strategic shareholders could have been chosen but...it was not. The 33 USD offer price might have been a 20% premium to last Friday's closing price but other than that it was a completely arbitrary number unrelated to its Net Asset Value.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/193/672/original/image_53585158121615504013720.png?1615504014" class="editor-image img-responsive" data-smartkarma-image-id="193672"></figure>Any ESG fund worth their name in salt should therefore shun Jardine and any of its subsidiaries as the directors at Jardine are mostly the same directors at <a href="https://www.smartkarma.com/entities/dairy-farm-intl-hldgs-ltd" target="_blank" data-smartkarma-citation="entities:7427:1" rel="noopener">Dairy Farm Intl Hldgs (DFI SP)</a>, <a href="https://www.smartkarma.com/entities/mandarin-oriental-intl-ltd" target="_blank" data-smartkarma-citation="entities:4773:1" rel="noopener">Mandarin Oriental Intl (MAND SP)</a>, <a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a>  and <a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a>. If you do invest in any of the above know one thing: the ESG statements in their annual reports are not worth the paper they are written on. Buyer beware.

Yesterday Jardine Strategic Holdings (JS SP) published its annual results in which it disclosed the NAV was 58.22 USD on 31/12/20. Contrast this with the 33 USD buyout offer tabled earlier this week. Something is seriously off here. Before one goes any further, please re-read the Corporate Governance (pages 136-141) of Jardine Strategic's 2019 annual report. It will be good to contrast what is written there with what is happening in real-life.The buzzword "du jour" for all investors is ESG. For the avoidance of doubt this stands for:Environmental, Social, and Governance.In the currently proposed buyout of Jardine Strategic Holdings (JS SP) by Jardine Matheson Holdings (JM SP) the entire board of both companies (largely the same people) is showing the investment community what it really thinks about the G in ESG. Given the transaction was advised by both JPMorgan Chase &amp; Co (JPM US) and HSBC Holdings (5 HK) we now also know how "ingrained" the ESG ethos is in practice at those banks.Given the +/-85% ownership of Jardine Strategic by Matheson, one would expect that Matheson could not vote on the proposed transaction and only Jardine Strategic minorities would have an actual vote to deem this offer "fair and reasonable" and give it their thumbs up/down at an SGM. Not in this case. Matheson is intending to use its 85% votes to "ram" this offer across the finish line. Which explains why Matheson expects this deal to close by the end of April 2021. Some changes take decades at Jardine, others clearly don't.It is astonishing that not a single person in these large banking institutions has stood up to Jardine's board and challenged them on the "fairness", "correctness" and "governance" of its proposed 33 USD offer. It is not because you have found some loophole, as made clear by David Webb, in your byzantine listings between Bermuda-Singapore-London that you are required to put your "Gangster" hat on and use it. The "Governance" hat could have been used, a fair buyout of Strategic shareholders could have been chosen but...it was not. The 33 USD offer price might have been a 20% premium to last Friday's closing price but other than that it was a completely arbitrary number unrelated to its Net Asset Value.Any ESG fund worth their name in salt should therefore shun Jardine and any of its subsidiaries as the directors at Jardine are mostly the same directors at Dairy Farm Intl Hldgs (DFI SP), Mandarin Oriental Intl (MAND SP), Hongkong Land (HKL SP)  and Jardine Cycle &amp; Carriage (JCNC SP). If you do invest in any of the above know one thing: the ESG statements in their annual reports are not worth the paper they are written on. Buyer beware.

G Stands for Governance: When Jardine Makes a Mockery of ESG; JS Publishes 58.22 USD NAV on 31/12/20

Singapore

Jardine Cycle & Carriage Limited operates as an investment holding company. The Company, through its subsidiaries, invests in automotive, consumer finance, utilities and infrastructure, heavy equipment and mining, property, agribusiness, cement, and consumer products businesses. Jardine Cycle & Carriage serves customers in South East Asia.

Jardine Matheson Southeast Asia (JCNC SP)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Jardine Matheson Southeast Asia (JCNC SP)

Jardine Matheson: Value Gradually Emerging Four Months On

Collapsing the circularity and removing its complexity should drive interest in Matheson. And holdings like HKL are cheap at 0.3x P/B. The pushback...

David Blennerhassett

Last Week in Event SPACE: Jardines, Xiaomi, Tilt Renew, Kumho Petro, Kunlun Energy, Takeei/Rever

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Last Week in Event SPACE: Jardine Matheson/Strategic, Xiaomi, Vocus Comms, Sanken Electric, Cocokara

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Jardine Strategic: What's Yours Is Mine

What rights do minorities have if they object to the Offer? Why is there not a shareholder meeting for Matheson shareholders to vote on the...

David Blennerhassett

G Stands for Governance: When Jardine Makes a Mockery of ESG; JS Publishes 58.22 USD NAV on 31/12/20

ESG is the buzzword "du jour". When the G in ESG gets put to the test in the recent Jardine Strategic buyout the 33 USD offer price looks extremely...

Nicolas Van Broekhoven

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)