IF YOU ARE an investor seriously interested in the shares of Jardine Matheson or its sister company, Jardine Strategic, there are just two things to consider.
First is the operating health of the company's various units, which include food retailer Dairy Farm, property developer Hongkong Land, property and auto company Cycle and Carriage, and hotel chain Mandarin Oriental. Last week, their financial results came in slightly above expectations and analysts are now more or less split on their ratings.
The second issue is far more controversial: will the company ever restructure, either by privatising or restructuring assets to let them trade at their (presumably) higher values?
Although this issue has come up many times before, it is no idle debate. The share price of Jardine Strategic is up 34 per cent since the beginning of the year, compared with a 23 per cent rise in the comparable Singapore index.
But first, a quick history. Jardine Matheson is the oldest of Hong Kong's 'hongs', or diversified trading companies, and one of the few still in British hands. The company went public in 1962. A complex takeover defence erected in the 1970s stands today. Jardine Matheson owns 79 per cent of Jardine Strategic, and Jardine Strategic owns 52 per cent of Jardine Matheson.
Along with overlaps in directorships, the cross-holdings prevent hostile takeovers. In addition, through special acts of the Bermuda Parliament, five of the companies benefit from legislation specifically written for them to make takeovers difficult.