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On Tuesday, Citi analysts revised their outlook on Jardine Cycle & Carriage Limited (JCNC:SP) (OTC: JCYGY), downgrading the company’s stock rating from Buy to Sell and adjusting the price target from SGD28.00 to SGD21.80. The revision follows a detailed assessment of the company’s near-term growth prospects and external economic factors.
Citi analysts expressed continued appreciation for the long-term potential of Jardine Cycle & Carriage’s Vietnam portfolio, which includes investments in Truong Hai Auto Corporation (THACO) and Refrigeration Electrical Engineering Corporation (REE). However, they raised concerns about whether the growth from these investments could sufficiently counterbalance the flat earnings growth anticipated at Astra, Jardine Cycle & Carriage’s largest subsidiary.
The analysts pointed to the divestment of the company’s stake in Siam City Cement in the previous year, combined with the impact of a strong US dollar, as additional challenges that could complicate year-on-year comparisons for the current year. According to Citi’s forecasts for the fiscal year 2025, there is an expected approximate 8% year-on-year decline in core income and a near 9% drop in dividends per share (DPS). Despite this, the projected dividend yield remains robust at around 5%. InvestingPro data reveals the company has maintained dividend payments for 33 consecutive years, with a current yield of 2.7%, demonstrating a strong commitment to shareholder returns.
The downgrade of Jardine Cycle & Carriage’s stock rating to Sell reflects the recent fiscal year 2024 results, the latest foreign exchange rates, and the adjustment of Citi’s target price for Astra from Rp6,500 to Rp5,700. The new price target of SGD21.80 is set at a 25% discount to the sum-of-the-parts (SOTP) valuation, indicating a more cautious stance on the stock’s value by the analysts at Citi.
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