Jardine Matheson Holdings Limited, the Hong Kong-based conglomerate with businesses in autos, consumer, construction, and financial services, reported lower earnings for the 2019 fiscal year on softer consumer sentiment and extensive disruptions across regional economies due to virus concerns.
The group’s underlying net profit of US$1.59bn fell 4% from US$1.66bn year on year. According to Bloomberg’s consensus estimates from 8 research analysts, the group missed analyst estimates of US$1.95bn. Revenue fell 3.77% to US$40.92bn from US$42.52bn last year.
The decline was mainly due to weaknesses in Dairy Farm’s retail portfolio, which saw operating profits 14% lower than the year prior, dragged by the protests and unrest in Hong Kong. Mannings and Maxim were key underperformers.
Within Jardine Matheson’s portfolio, Jardine Motors and HongKong Land performed relatively well. Net profits for both segments were up 18.7% and 5.0% year on year respectively, helped by the Zhongsheng group in mainland China and the real estate assets in Hong Kong’s central district.
China Galaxy Securities analyst William Tng downgraded his recommendation for Jardine Matheson shares to “hold” from “add” and lowered his earnings estimates.
The group also booked a US$1.5bn disposal gain from the sale of its stake in Jardine Lloyds Thompson, which will likely fuel the group’s expansion plans into fast growing consumer markets in Greater China and Southeast Asia.
Management thinks short-term outlook will remain challenging given the extent of COVID 19’s impact, but remains long-term positive on the economic resilience of China and the markets which the company operates in.
(Assignment piece during Master’s Program)