Creating Value at Jardines

Jardine Matheson (‘Jardines’ or ‘the Group’) is a diversified group operating across our core geographies of China and Southeast Asia. Over our 190 years, we have developed a track record, expertise, networks, and long-standing relationships in the region that support our Group businesses in creating value and sustainable growth.

In this section, we hear from John Witt, Group Managing Director of Jardine Matheson, as he discusses the strengths of our portfolio across the regions of North and Southeast Asia, and the opportunities ahead for the Group.

What is the role of Jardines in creating value for the Group’s businesses?

We are active and long-term owners of our Group businesses. We partner with founder entrepreneurs and leading local companies, sharing our long-standing relationships, localised market knowledge, international best practices, and capital resources. We also serve as the partner of choice for many international brands when they want to find a single platform for accessing the region.

With our businesses, we work together to set strategic direction and deliver on four priorities. These are:

1. Evolving our portfolio;
2. Enhancing leadership and entrepreneurialism;
3. Driving innovation and operational excellence; and
4. Embedding sustainability.

We focus on having the right leaders in place across our businesses, and ensuring recruitment, learning and development, and succession planning all support our strategic objectives. Cross-group people mobility is also an important characteristic of the way leaders are developed across the Group.

How does Jardines approach investments and grow them for the long-term?

Firstly, we partner with management teams that we trust and who have the drive to develop and execute strategies to grow their businesses.

We take a disciplined approach towards our capital structure, which ensures the stability of our businesses across cycles. This approach includes the investment principles that we apply to manage our gearing and the long-standing relationships we have with a wide range of capital providers.

We are patient, long-term investors, and we often start with small interests in companies and build them up over time. We also make substantial investments when we see the right opportunity, are confident in our experience and knowledge of the sector, and have the talent in place to succeed.

For example, we invested in Astra just after the 1997 Asian Financial Crisis, when others were still apprehensive about Southeast Asia. Over the years, we increased our investment, and alongside capital, we provide strategic advice and talent. Today, Astra is one of Indonesia’s leading local companies. Similarly, in Vietnam, we started our investments in THACO in 2008 and continue to support the group. Today, THACO operates across multiple sectors, principally in automotive, but also in property and agriculture.

We also continue to invest via our Group businesses. An example is Hongkong Land, where in the early stages of COVID – together with strategic partners – we invested in a 1.1 million square metre mixed-use development along the West Bund, which has a development cost of approximately US$8 billion. The Group’s deep knowledge of the property sector and strong balance sheet allowed us to successfully invest and develop the project against a challenged property market outlook in the Chinese mainland.

Demonstrating the scale of the investments we make via our businesses, in 2022 alone, we deployed US$2.7 billion of organic growth Capex across the Group.

Tell us more about the Group’s geographical focus.

We are and will continue to be focussed on China and Southeast Asia. Our diversified portfolio has benefitted us through difficult periods such as the pandemic – where our performance in 2020 was largely carried by China, while over the following two years, Southeast Asia contributed significantly towards our strong performance.

On the Chinese mainland, we are selective of the regions in which we invest. For example, Hongkong Land’s property businesses are in Tier 1 and Tier 2 cities – essentially along the Yangtze River Delta – while our consumer retail businesses like Yonghui and Zhongsheng are mostly in well-developed and economically vibrant higher growth areas.

In Southeast Asia, our highest priority growth markets are in Indonesia – where Astra is a major investment – and increasingly in Vietnam, where we are building up our portfolio.

Our businesses are well-positioned to capture the themes of urbanisation and the rising middle-income population in Asia. They support infrastructure development and provide products and services to meet the growing needs of consumers and businesses.

In Southeast Asia, Astra has businesses in sectors including automotive, financial services, heavy equipment and mining, agribusiness, and property, all of which support the country’s growth. They also provide almost 200,000 jobs.

Zhongsheng, China’s largest automotive dealer, is well-placed to capture opportunities of the growing automotive market by leveraging its operational capability as a leading distributor and its strong customer base.

In Hong Kong and Singapore, DFI Retail Group continues its digital transformation to cement its position as a market leader.

The exception to our geographical focus is Mandarin Oriental, which is a global luxury hotel investment and management group.

Overall, we expect both China and Southeast Asia to make balanced contributions to our growth and earnings over the long-term.

What are the opportunities for Jardines to generate growth and returns, and how is the Group organising itself to capture them?

In the near-term, returns will come from the cyclical recovery as we emerge from the pandemic. For example, our consumer businesses like Mannings in Hong Kong and Maxim’s across the region, as well as Mandarin Oriental, should benefit significantly from the reopening of Chinese borders.

Looking ahead, we are expecting some of our more recent substantial investments to start generating sustainable returns. Some examples include Astra’s infrastructure business in Indonesia – principally investments in toll roads – Hongkong Land’s important West Bund development project, as well as THACO’s business in agriculture.

We are responding to macro trends and growth sectors where we see opportunities. These include digitalisation, healthcare services, and sustainability.

In the area of digitalisation, we have expanded our digital banking offerings through investments in Bank Jasa Jakarta and livi bank in Hong Kong.

We have made investments in healthcare services – including Halodoc and Medikaloka Hermina in Indonesia – and these are expected to be a significant growth area as consumers grow older and more affluent in the future.

Finally, we are capturing sustainability and energy transition business opportunities in markets like Vietnam, where there is strong government support for green energy. REE is now one of the biggest players in renewables in Vietnam, particularly in solar, wind and hydro. Furthermore, we have begun to make early-stage investments in renewables in Indonesia.

Over the past two years, our focus has been on the simplification of our Group structure which has required significant capital, as well as ongoing review and disposal of non-core assets.

At the same time, we are increasingly positioned to capture new opportunities. You will note that we have made senior appointments to drive business development efforts in both China and Southeast Asia.

I am confident and excited about the opportunities ahead for the Group and our businesses across Asia.