Exceptional track record provides defensive appeal after recent rally. EPS growth has averaged 22% pa and annualised total shareholder returns 27% over the past 10 years. It has been comfortably the best performing conglomerate we cover and we argue its business focus and track record provide defensive qualities after the recent market rally.
Asian retail, HK investment property and commodity focus mean its businesses have decent prospects and little exposure to the weak export sector. Jardine also has the balance sheet and skill set to make opportunistic acquisitions. Despite tough economic conditions, we forecast stable recurring earnings in 2009 and a 14% rebound in 2010, plus strong free cash flow and consistently high returns on invested capital.
We set our USD30.5 target at a 30% discount to our appraised valuation of USD44. We argue the shares should trade at the top of the historical range (2005-08: 30-40% discount) based on the market-leading position of the Group’s key businesses, plus the pick-up in share performance indicators. Our target plus FY09e DPS of USD0.75 implies 26% total return. Initiate at Overweight (V).
Sponsored Links
No comments:
Post a Comment