What is the true NAV for Jardine Strategic?

Looking on page 5 of its 2006 Annual Report, Jardine Startegic (JSH) at US$13.40 may be trading at 70% of its net asset value (NAV) of US$19.38, which is calculated based on market price of its holdings and excluding 455 million shares held by Jardine Matheson (JMH).

JSH excludes JMH's 455m shares due to cross holdings. JMH owns 80% of JSH and JSH owns 53% of JMH. JSH has a total of 1072m shares. As such, JSH effectively owns the 455 shares out of the JMH's 858m shares in JSH, which may mean that there are effectively 617m shares, instead of the 1072m shares on paper.

If we use the full 1072m shares to compute JSH's NAV, the undervaluation disappears as the NAV will then be at around US$11.15 per share using the figures in its 2006 AR.

JSH owns, besides 53% of JMH (note: JMH owns 80% of JSH),
- 64% of Jar C&C
- 78% of Diary farm
- 74% of Mandarin Oriental
- 47% of HongKong Land (HK Lands owns 70+% of MCL Land and is also one of the three partners for Marina Biz Fin Centre and the recently built One Raffles Link) You can find this information in its 2006 Annual Report too.

Another good question to ask may be what the difference is between JSH and JMH and why they need the cross holdings. This is something that I have yet to figure out.

What is the true NAV for Jardine Strategic? I don't know. I have just posted in www.shareowl.com to ask the professor there. Maybe he may be able to provide an answer there. If you wish to know his answer (supposing that there will be an answer), you may have to subscribe to it. It is not right for me to post his answer in my blog.

As usual, please do your own research and do not simply accept my thoughts here. Only recently, I have discovered again another mis-calculation in my excel spreadsheet. I am rather prone to error now and then.


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