Jardine Matheson Holdings Limited (J36) Earnings Call Transcript & Summary

Good morning, and welcome to the Jardine Matheson 2023 full year results presentation. I'm John Witt, Group Managing Director, and I'm joined by Graham Baker, our Group Finance Director. This is the first time we are hosting this presentation both in person and online for some time, and it's good to see so many familiar faces in the room in Hong Kong here this morning. Over the next half hour, I'll update you on progress against our group's strategic priorities. Graham will then take you through the financial performance of the group and our individual businesses. We'll end with the outlook and the Q&A. For those online, you should be able to see the slides on your screen and the Q&A box at the bottom of your page. Please submit your questions at any time as we go through the presentation, and we'll answer them at the end. Our diverse portfolio of market-leading businesses across geographies and sectors generate strong cash flows and enables us to deliver resilient performance across cycles. This is seen in the large increase in the contribution from Astra from less than 30% 4 years ago to 44% in 2023. We continue to be focused on our core regions of China and Southeast Asia. And over the long term, we expect both China and Southeast Asia to make balanced contributions to our growth and earnings. Contributions from our Southeast Asian businesses have increased to 56% from 42% in 2019. Our diversified businesses continue to grow and prosper despite challenging market conditions across the region. Looking now at progress we have made over the past year on our strategic priorities, starting with enhancing leadership and entrepreneurialism. The group made several significant senior appointments in 2023 to enhance leadership and drive future growth. These included new chief executives at DFI Retail, Mandarin Oriental, Hongkong Land and Jardine Pacific. Scott Price succeeded Ian McLeod as Group Chief Executive of DFI Retail. He is an experienced senior executive with 25 years international experience, mostly in Asia, spanning retail, logistics and consumer packaged goods. Since joining in August 2023, Scott has introduced a strategic framework, which will support DFI Retail's capital allocation priorities and growth plans over the coming years. Laurent Kleitman succeeded James Riley as Group Chief Executive of Mandarin Oriental. Laurent was President and CEO of Parfums Christian Dior and brings many years' experience in building iconic consumer brands across the beauty and broader FMCG sectors. He aims to scale up Mandarin Oriental's management business, further elevating the brand as the reference point in luxury hospitality for both guests and hotel owners. In November 2023, we announced that Michael Smith will succeed Robert Wong as Chief Executive of Hongkong Land with effect from the 1st of April. Michael brings 30 years of real estate, capital markets and investment banking experience. He was most recently regional Chief Executive Officer of Europe and the United States at Mapletree Investments, a global real estate development, investment, capital and property management company. Elton Chan, who is currently Chief Executive of the Jardine Schindler Group, will succeed Y.K. Pang, as Chief Executive of the Jardine Pacific Group of companies on Y.K's retirement on the 1st of April. Elton has been with Jardine since 2004 and has worked in a range of senior management roles across the group. During the year, we also announced the appointments at Jardine Matheson of two new independent nonexecutive directors, Janine Feng and Keyu Jin. These appointments mean that the Board now comprises 50% independent nonexecutive directors and bring important diversity to the Board. A crucial part of building an entrepreneurial culture is finding, developing and keeping the right leadership talents, and this is a high priority for us. It is also essential to have the right management structure to support the future development of our portfolio and new growth areas. We continue to invest in developing our leaders and giving them opportunities to advance. We have seen multiple senior management progressions during the period, and we have supplemented our talent planning with group-wide leadership development programs co-designed with world-class institutions. Finally, we are focused on building a diverse and inclusive culture where everyone can succeed our inclusion, equity and diversity strategy includes a 5-year target with an initial focus on gender representation. Turning to evolving our portfolio. Our capital allocation and portfolio strategy allows us to seize opportunities when they arise to optimize our portfolio and build for future growth. We focus on further strengthening our position in the high-potential markets of Asia and in those industries where we can establish a leading position, to create long-term value and ensure sustainable growth. In 2023, the group continued to make strategic investments, particularly in Southeast Asia. Astra continued its diversification into non-coal assets as part of its commitment to adjust transition with its subsidiary, United Tractors, acquiring interest in the nickel mining and processing businesses of Stargate and Nickel Industries. United Tractors also invested into Supreme Energy Sriwijaya, which owns an operating geothermal project in Southern Sumatra. Astra progressed its health care strategy through an additional $100 million investment in Halodoc, a leading digital health ecosystem platform in Indonesia. The group further reinforced its commitment to Vietnam in the period. JC&C invested an additional $350 million in THACO through subscription for a 5-year convertible bond and also increased its investment in REE Corporation. We also continue to simplify the group's portfolio laying the foundation for the next stage of growth. In June 2023, we sold our Motors business in the United Kingdom for $402 million. In September, the group completed the sale of its 28% stake in Hong Kong listed Greatview. And in March this year, we completed the sale of Jardine Aviation Services. Among our subsidiaries, DFI Retail disposed of its Malaysian grocery retail business, and Mandarin Oriental sold 2 hotels retaining management contracts. We will continue to look for appropriate opportunities to recycle capital. Looking now at innovation and operational excellence, the group and its businesses continue to make good progress in driving greater efficiency and productivity. HACTL increased its capacity to handle pallets by 30%, enhanced its use of robotics and introduced automation more generally to increase efficiency. DFI Retail implemented new strategic framework [ ready ] to drive sustained growth with a revised organization structure, which moves decision-making closer to customers at lower cost, and focuses on driving enhanced shareholder returns. In our consumer-facing businesses, in November, Astra launched Bank Saqu, a digital banking service with a focus on small business owners and entrepreneurs. 100,000 new customers joined in less than a month of its opening. In the automotive space, Astra acquired OLX, a leading online used car platform in Indonesia. OLX has been integrated in Astra's existing used car business positioning the business as a leader in both off-line and online car sales as that market grows significantly. And in June 2023, Jardine Cycle & Carriage announced a used car and after-sales partnership with Carro, a leading online platform in Singapore. Mandarin Oriental is implementing its guest experience program to improve its ability to recognize, understand and engage guests. It is also establishing a bespoke relationship management service to build brand loyalty. We continue to seek inorganic growth opportunities in the digital economy, emerging industries and new geographies such as Astra's partnership with Equinix to develop data centers in Indonesia. And we progressed the implementation of an in-house global business services function. This provides a range of core back-office services to our businesses across the group. As a long-term business, sustainability is at the forefront of our business practices, and we have made significant strides in progressing our agenda since we started to focus on this area as a group some 4 years ago. The culture within the group is fast becoming one where sustainability is seen as a business opportunity and an integral part of our day-to-day business lives. I'm pleased to say that the improvements our businesses have made in this area were recognized by increased ratings from ESG agencies. We're increasingly focused on the 3 main pillars of our sustainability strategy: Leading climate action, driving responsible consumption, and shaping social inclusion. We continue to build momentum on our net-zero strategy and our businesses have set decarbonization targets to align with the trajectory needed to limit global warming to 1.5 degrees Celsius. All of our businesses have also developed decarbonization pathways to achieve their targets for reducing Scopes 1 and 2 emissions. We're also working over time toward understanding and reducing Scope 3 emissions. Good business is sustainable business. And with our focused approach, we believe the future growth of the company will also benefit the communities in which we invest. Sustainability is no longer simply a separate agenda but is embedded now as a core element of our strategy, and all of our future investments will take account of it as a key part of the decision-making process. In driving responsible consumption, most businesses have identified the material waste streams and set individual waste reduction or diversion targets, and we are looking for synergies and cooperation opportunities between our businesses on circular solutions. We're also building up our expertise to understand our dependencies and impacts on biodiversity so that we can adopt industry-leading practices for biodiversity management. Our Indonesian businesses face sensitive, environmental and biodiversity issues, but we believe that they're taking appropriate and extensive actions to manage them and have also made great efforts to increase transparency in this regard. In relation to shaping social inclusion, we are prioritizing the promotion of access to quality education and efforts to increase awareness of mental health. Let me now hand over to Graham to go through the group's financial performance for the year. Graham?

Thank you, John, and hello, everyone. The group delivered a very solid performance in 2023 with underlying profit now above pre-pandemic levels. Our diversified portfolio continued to generate strong cash flows, maintaining a strong balance sheet while also affording capacity to continue investing for future growth. 2023 saw particularly large investments at Astra. At group level, we saw total revenue for the year of $36 billion, 4% down from last year, primarily due to the sale of the group's U.K. motor operations and DFI's Malaysia grocery business. Revenues at ongoing subsidiaries grew 2%. Underlying net profit was $1.66 billion, 5% above 2022 and a 7% increase at constant exchange rates. Underlying earnings per share was $5.74, also up 5%. The Board is recommending an increased final dividend of $1.65 per share, which produces a full year dividend of $2.25, up 5% from 2022. This is in line with our ongoing commitment to progress the dividend as earnings grow. Looking across the businesses, 2023 saw another record performance from Astra and strong recoveries at DFI Retail and Mandarin Oriental. There were, however, challenging conditions on the Chinese mainland and in Vietnam, which adversely impacted Zhongsheng, Hongkong Land and THACO in JC&C. I'll go through the performance of each business later. So we'll note just 2 further points here. Within the $160 million headwind from our Motor Interests, $124 million was lower contribution at Zhongsheng and $36 million, the sale of JMG U.K. Of the drop at Zhongsheng, approximately 60% reflects the impact of highly competitive market conditions in the Chinese Mainland new car market following a record performance in 2021, the tail end of which we reported in JM's 2022 1st half. And the remaining 40% was a result of the change to a new accounting approach for Zhongsheng in 2023. I'll cover the details of this later. Second, lower corporate costs in 2023 principally reflect unrealized mark-to-market gains on certain investment funds reversing similar unrealized losses recorded in 2022. Overall, 5% growth amid challenging conditions in 2 of our 3 core growth markets demonstrates once again the value of our diversified portfolio spread across both North and Southeast Asia. Nevertheless, we did experience markedly different conditions in the second half of the year from the strong start we made in the first half. Strong growth at Astra, DFI and Mandarin Oriental continued across the year but more difficult trading conditions and stronger comparables in 2022, tempered their contribution in the second half. Similarly, Hongkong Land saw a weaker performance in the second half as conditions in the Mainland development properties business continued to progress and remain challenging. Although JC&C saw conditions begin to stabilize in Vietnam, overall, the group was flat in the second half of the year. Challenging market conditions have continued into the opening months of 2024. And although we're optimistic that our motors businesses will not bring such a large headwind this year, softening commodity prices as well as market sentiment in our key sectors means we begin the year with a cautious outlook for short-term growth. Taking a quick look back over the period as a whole since 2019. The group has grown underlying earnings per share cumulatively by 36%. And full year dividends per share by 31%. At constant exchange rates and net of businesses disposed during the period, underlying EPS grew by 45%. Well, I think you'll all understand that these very strong progressions reflect to a large degree, the returns we have made to shareholders through both share buybacks and purchases within the group, including the privatization of Jardine Strategic early in 2021. In total, these contributed more than 90% of EPS growth. We have also now exceeded our prepandemic results record in 2018. We have also built a foundation which offers shareholders in Jardine Matheson, a substantially increased dividend, which at current prices represents a trailing yield of around 5.7%. And is covered approximately 1.7x by recurring cash flows after corporate and financing expenses at the parent company level. I'd note also that although we've prioritized debt paydown at the parent company level in 2023 and will continue to do so in 2024 in order to create flexibility to invest for future growth, the company repurchased 4.4 million of its own shares for cancellation in 2023 for $209 million, primarily in order to cancel the impact of scrip issues during the year on overall share count and EPS. Outside underlying earnings, the group recorded a net nontrading loss of $975 million in 2023. The largest component of our nontrading items was a net unrealized loss on the usual revaluation of the group's investment properties during the period, primarily a net loss of $710 million related to Hongkong Land's IP portfolio and $391 million related to Mandarin Oriental's Causeway Bay site. Impairments of assets in 2023 totaled $172 million, and we're principally against goodwill in DFI Retail's grocery operations in Macau and Singapore. Gains on property sales of $105 million included $65 million from the sale and leaseback of JC&C's motor properties in Singapore. The other non-trading item of note is the group shares of Zhongsheng's results in the second half of 2022. Zhongsheng's own interim and annual results have historically been reported after our results announcements. In previous years, therefore, we recognized our 21% share of Zhongsheng based on publicly available information. In other words, 6 months in arrears. As noted last year, we believe a better representation of current performance will be given by reporting on a calendar year basis. Accordingly, the group has changed its accounting for Zhongsheng from 2023 to reflect an estimate of our share of their results for the second half of 2023 based on recent external analysts' forecasts. Our share of Zhongsheng's profits for the gap period of $101 million, representing results for the second half of 2022, has therefore been treated as a nontrading item so as not to distort the current year's underlying performance. Moving to the group's balance sheet. Net borrowings at the 31st of December, excluding financial services, grew to $8.4 billion. Gearing increased from 13% at the end of 2022 to 15%. This increase reflected a $2.2 billion reduction in Astra's net cash, excluding financial services position, which more than offset a $1.4 billion decrease in net borrowings across the remainder of the group's listed entities. Astra's cash position is reflected on the slide as part of JC&C's consolidated net debt. Astra's lower net cash reflected major investments and returns in the year, offsetting strong continued operating cash inflows. Organic CapEx investments of $1.5 billion principally at United Tractors to renew capital equipment following the pandemic. Strategic investments of over $1 billion, the largest of which were UT's associate interest acquired in Nickel Industries of $616 million and its acquisition of Stargate for $285 million. $1.7 billion of returns to external shareholders at Astra and its subsidiaries including its enhanced 2022 final dividend payout. JC&C's own corporate level net debt dropped at the end of 2023 from $1.5 billion to $1.3 billion as a result of the higher dividend received from Astra, partly offset by investment in THACO's convertible bonds. At Jardine Matheson Corporate, lower net borrowings at the end of December, mainly reflected proceeds from the sale of the group's U.K. motor operations and Greatview. Share buybacks to eliminate the impact of scrip on EPS and small share purchases in group companies were primarily funded from recurring cash flows. Turning now to cash and liquidity. Net cash, cash flow from operations was slightly below 2022 despite higher cash generated from operations, and this reflected higher financing costs and tax paid. The group's businesses continue to be cash generative, supported by strong balance sheet. The group has around $14 billion in cash and undrawn committed borrowing facilities and substantial capacity to deploy capital to finance future growth. I'll now briefly go through the individual performance of each business. For a detailed analysis, you can access the results briefings of most of our business units via our Jardine's corporate website. Starting with Astra, which was the largest contributor to the group's underlying net profit. The group owns its interest in Astra through JC&C, and the numbers on this slide reflect the contribution made by Astra to JC&C. Astra performed strongly with earnings growth reflecting improved performances from most of its businesses, especially into automotive and financial services divisions. The contribution from the automotive division grew by 15% to $342 million, reflecting higher sales in the motorcycle and components businesses. Astra's market share for car sales increased from 55% to 56% while its market share for motorcycle sales increased from 77% to 78%. Astra Otoparts, the group's components business reported a 39% increase. And Astra financial services contribution increased by 28%, primarily due to improved performances by its consumer finance business. The contribution from heavy equipment, mining, construction and energy was stable in the year as a whole, with better performances from construction machinery and mining contracting offsetting lower contributions from the group's coal and gold mining businesses. Second half results, however, were lower primarily as a result of lower coal prices. Agri business saw its contribution fall by 45%, largely due to lower selling prices of crude palm oil. There was an 81% increase in the contribution from infrastructure and logistics due to an improved performance in the toll road, transportation solutions and logistics businesses. The group's toll road concessions saw 7% higher daily toll road revenue during the year. Turning now to Hongkong Land. Underlying profit fell by 5% to $734 million. Performance was impacted by lower profits from development properties, which offset improved results from investment properties. In investment properties, there was a better performance from the group's luxury retail and Singapore and Macau office portfolios, offsetting reduced contributions from the Hong Kong office portfolio. Average retail rents in Hong Kong increased from HKD 177 per square foot in 2022 to HKD 203 per square foot in 2023. And mainly due to increased tenant sales and the removal of temporary rent relief. The landmark retail portfolio saw a steady recovery in tenant sales and footfall. However, the average office rent in Hong Kong -- rents in Hong Kong were lower than 2022 due to negative rental reversions. Nevertheless, the group's Central office portfolio remained resilient and outperformed the weaker overall market. Vacancy was well below that for the Central Grade A office market. And in Singapore, the office portfolio performed well with average office rents increasing and vacancy remaining low. The group's Beijing and Macau luxury retail portfolio saw higher contributions than the previous year while in Shanghai, work continued to progress well on the West Bund Development. In development properties, as anticipated, the profit contribution from the Chinese Mainland was lower than last year due to a combination of lower sales, reduced profit margins and the impairment of some residential for-sale assets. In Singapore, the profits recognized from the development properties business were largely in line with the prior year. The group's joint venture projects in the rest of Southeast Asia performed within expectations, producing a combined profit contribution in line with last year. Jardine Pacific reported a net profit of $164 million, 10% lower than 2022. Most businesses saw good performances, but our consumer businesses continued to be impacted by weaker consumer sentiment in Hong Kong. Within the group's B2B businesses, Jardine Schindler recorded higher sales and a stable contribution from the existing installation business which helped offset the challenging new installation market. JEC's Hong Kong businesses reported solid performance, while its regional businesses saw improvements. The order book remained strong. Gammon reported higher profits, reflecting higher sales and ongoing operational improvement, projects in which continue to generate encouraging results. In transport services, HACTL saw good performance despite lower cargo volume and higher financing costs. Jardine Aviation reported a net profit for the year. HACTL continues to face labor shortages. The group's consumer businesses faced challenges. Jardine Restaurants delivered a net loss with macro challenges across all markets and the absence of government support we received in Hong Kong last year. Zung Fu Hong Kong reported a lower profit year-on-year with the overall contribution from Mercedes decreasing and supply constraints experienced by Hyundai. The business also incurred start-up costs from the newly acquired smart and Denza car distributorships. Moving to Zhongsheng as part of our Jardine Motor Interests. The group received a substantially lower underlying contribution of $139 million from its 21% interest in Zhongsheng in 2023 as its new car business faced a challenging market environment for new luxury vehicle sales volumes and margins during the year. This was due to China's EV transition and intense auto market competition. We have noted the change in our accounting for Zhongsheng already, so I won't repeat that here. Despite challenging short-term market conditions, we believe that Zhongsheng has strong market insight, deep relationships in the Chinese Mainland premium vehicle segment and superb capabilities to execute its well-developed strategy focused on growth in after-sales service and used cars, which will deliver long-term value for the group. DFI reported underlying net profit of $155 million for the full year, a substantial improvement on its $29 million profit last year. This increase was supported by strong growth in profitability across subsidiaries and improved performances by the group's associates. Sales revenue was flat at $9.2 billion. However, excluding the impact of the divestment of the Malaysia food business, DFI's revenue grew by 5%. Underlying operating profit for the food division was $45 million, down 51%. North Asia performance was impacted by the absence in 2023 of the pantry stocking behavior seen during the fifth wave of COVID in Hong Kong in the equivalent period in 2022. But performance improved in the second half. Southeast Asia was adversely impacted by intense competition and weakening consumer sentiment. Total convenience sales were up 8% to $2.4 billion, and underlying profit was $88 million, up 74%. In Hong Kong, there were strong sales in the first half while sales were broadly in line with the prior year for the second half, reflecting increased traveling abroad by Hong Kong residents. 7-Eleven South China and 7-Eleven Singapore both benefited from their reopening in their respective economies. In the health and beauty business, revenue increased by 21% to $2.4 billion, with like-for-like sales growing by over 20%. The successful performance was driven in particular by a recovery in tourist traffic from markets reopening and gross margin improvement. IKEA reported 5% lower sales revenue of $794 million and lower profit as the business was impacted by reduced home renovation and furniture demand. In associates, Maxim's reported a strong recovery, more than doubling its profit contribution from 2022 as customers returned to dining out. The group's share of Yonghui's underlying losses was lower at $36 million compared to $80 million in 2022. And Robinsons Retail's underlying profit contribution fell from $24 million to $15 million. Turning now to JC&C. The group reported $1.16 billion in underlying profit, mainly supported by record results from Astra. Beyond Astra, underlying profit of $141 million was 23% below the prior year. This primarily reflected THACO's contribution, which was 57% down mainly due to lower automotive profits as a result of weak consumer sentiment in Vietnam. Direct Motor Interests contributed $68 million, an increase of 8%, with higher profits from Tunas Ridean in Indonesia and Cycle & Carriage Bintang in Malaysia. Finally, the contribution from the group's other strategic interests was 2% down at $84 million due to lower earnings at REE offset by higher profits in Siam City Cement. Dividend contribution from Vinamilk was stable. Mandarin Oriental's strong improvement in performance in 2023 reflected robust global appetite for luxury leisure travel. Underlying profit increased to $81 million from $8 million in 2022. Owned hotels returned to profit. The management business delivered strong operating performance and improved its profitability. Combined total revenue for hotels under management was $1.9 billion, up 21% from 2022. This was primarily due to an increase in revenue per available room, driven by gradual recovery of occupancy across all geographies, a continuation of high rates in EMEA and a solid rebound in rates in Asia. Food & beverage revenue increased by 18% year-on-year. In 2023, the group opened 2 new hotels and completed one rebranding, expanding its total portfolio to 38 hotels and 9 branded residences. 8 new projects were announced in 2023. The group has a strong development pipeline with a total of 28 hotels and 2 stand-alone residences expected to open in the next 5 years. With that, I'll now hand back to John.

Thank you, Graham. Turning now to the group's outlook. After a very solid 2023, albeit with growing headwinds in the second half, the group enters 2024 facing continued challenges across China and Vietnam as well as lower market prices for a number of Astra's key commodities. We're therefore cautious of the short-term profit growth outlook. However, we remain confident in our long-term strategy across our core markets in Asia. We will continue to focus on our strategic priorities, in order to deliver growth and long-term value benefiting from our diversified portfolio. With that, we come to the end of our presentation. We'll be now delighted to take questions both from the room as well as those coming in from online.

We have received one during the presentation online. Maybe for the purposes of the room, I shall read it out. Graham, I think this is one that we can both contribute to. It's a question from William Tng at CIMB Research. The question is, given the simplification of the Jardine Group structure, has the company performed further evaluation on the cost benefit of having Jardine Cycle & Carriage remain as a listed company? Can you elaborate on the parent company's view of this? I would say first, Graham, before you, I think, talk us through this sort of our general approach in terms of capital allocation, I would say the simplification we did with Jardine Matheson and Jardine Strategic a few years ago, it's a very specific transaction. You'll recall that Jardine Matheson and Jardine Strategic had a cross-shareholding between them. And so in privatizing effectively Jardine Strategic, we significantly simplified the really top holding of the company. It's a very specific part. It was a very specific part of the structure, quite different from the individual subsidiaries like Jardine Cycle & Carriage or DFI and the others. But maybe Graham, you can take us more generally.

Sure. I think perhaps just a couple of other specifics on JC&C. Obviously, with the group's portfolio is so diverse, we think it's important to -- I'm struggling a little with my microphone. Perhaps if I take it closer. We think it's important to have expert teams close to the businesses that we invest in. And so having a team based in Singapore, close to our businesses in Southeast Asia. First of all, I think, is very important. In relation to the specifics of the listing, we think that the discipline of having a public listing and shareholders for that team to answer to continues to be of use and value and importance. If I then turn to the general question of how we think about capital allocation across the group, we've remained very consistent with the priorities that we have had for many years and that we published back in 2020 starting with organic investments in the sustainable growth of our portfolio companies, followed by supporting the continued progression of the dividend. And then we think about M&A opportunities, both within our existing portfolio and within the outside world on a level playing field, prioritizing value, growth and risk. Within that context, over the last few years, in combination with the $5.5 billion acquisition of the minority interest in Jardine Strategic, we've also deployed in excess of $1.5 billion picking up shares in the portfolio companies, either through buybacks at their own level or through investments that we've made in the portfolio directly. And therefore, where we are today, is we've done a lot of that. And therefore, we're prioritizing our focus at this point in time on continuing to improve the quality of the balance sheet as well as looking for external opportunities in the outside world and building flexibility in order to invest further in those. So nothing to announce, nothing to say further on JC&C. We have picked up during 2023 a few shares in JC&C as we did in the Mandarin, and we also saw our interest increase in Hongkong Land as well as share buybacks that we operated at the parent level, but there's nothing significant in that. It's just part of our normal operating processes.

Questions, please.

This is Jeff from CLSA. So one question from me, a really big picture. So if we look through into the next, let's say, 18 to 24 months, what would be the organic earnings growth driver for the entire group, given the lots of moving parts and a lot of initiatives going on. So I just want to hear your view on that.

Sure. And I'll start with the -- I'll pick apart a few pieces, and I'll start with the largest contributor to the group, Astra. As John mentioned, we're a little bit cautious in the current year around some of the pressure that commodity prices will bring. But putting that to one side, we've just got through the election in Indonesia very smoothly. And it appears that there's continuity of policy. And over the last 5 years, Indonesia has continued to perform strongly, benefiting from firm commodity prices globally and a clearer, more business-friendly attitude towards inward investment. We think Astra is very well placed to benefit from that. It's very strong market share positions in the auto segment, continue to defy the doubters. And of course, there will be new competition come into the market. But I think that the world has started to wake up to the strong proposition, particularly in the hybrid sector that our key OEM partners bring, which we believe will continue to be important and relevant in the Indonesian market. Of course, much depends on the growth of the overall auto segment in Indonesia, and that has for many years, frustrated with its inability to grow beyond 1 million cars a year. But I'd note that average GDP per head in Indonesia has grown to very nearly $5,000 in Indonesia in 2023. And that, of course, is the point at which China suddenly saw a firming strong middle class driving consumption. And I think that, that will continue to be an opportunity for Indonesia and Astra to drive growth. The new investments that have been made in the mining sector and of course, the strong position that we already occupy there. Right now, we're probably in a commodity cycle trough. But of course, Indonesia enjoys some of the most competitive costs in the world in the key commodities that should drive growth for Astra going forward. And of course, its financial services business is also very well positioned to continue to benefit from growing prosperity, not only from the connections that it has with the auto business but also from the new development with Bank Saqu, the collaboration with WeLab. So I think in Indonesia, we have strong prospects for Astra to continue to perform well in the mid and long term, albeit in the short term, it may not be as large a contributor as it has been in 2023 and 2022 because of that commodity pace.

I would say, I mean, in general terms, we're very excited about Indonesia as a market. Arguably, between 2010 and 2020, I mean some of our businesses really didn't see some of their key statistics moving, as Graham mentioned, unit sales of cars, unit sales of motorcycles probably had peaks earlier in that decade rather than at the tail end. But I think what we see in terms of the infrastructure of Indonesia, the growing middle classes, the important contribution commodities have made both to the overall economy, but also into the relative stability of the currency. The inward investments, particularly on the commodity side, I think we're really excited by the prospects of Indonesia going forward. And I suppose, in -- while we feel a bit more cautious, particularly in North Asia. I think ultimately, if I look at the midterm and the long term, intra-Asian trade will benefit not only Indonesia, but the entire area, Vietnam, as Graham mentioned, that a tough 2023. But we have conviction that Vietnam equally remains in a very strong place. And I suppose that's sort of looking at it from a geographies perspective. But as I said earlier, in terms of these leadership changes, these are very deliberate changes because we want to bring different strategies and accelerate the growth in our individual portfolio companies. We see already, and we've had -- we've just had the -- yes, a series of Board meetings this past week and really a very exciting strategy laid out by business both in DFI Retail and the beginnings of the strategy formulation in Mandarin Oriental. And I think sort of clearly, strategy and execution are both things that need to get -- be done right, but I suppose we're filled with conviction as we start in the journey of these 2 companies. And I thought we have with the new appointments at Hongkong Land and JP -- these yet to play for. Now that doesn't again take away from the near-term headwinds that we face, the market is without tailwinds. But again, we continue to manage the basis to build mid- and long-term growth.

Just to round out the question, Jeff, if I then come back to the other key growth drivers. Clearly, strong cyclical recovery still ahead potentially for Dairy Farm, particularly in the health and beauty and convenience segments. And ultimately, I think, as you look a little bit further out potentially in the IKEA segment as well as demand at some point will return to the furnishing world. And the Mandarin continuing to go from strength to strength. I see good growth prospects and opportunities there. If we go out a little bit further beyond. I think Hongkong Land, everybody understands both the Hong Kong and the Mainland markets are pretty subdued at the moment. But going out beyond the next couple of years, we will have the West Bund site in Shanghai, added to our IP portfolio in Hong Kong and Singapore, 1.1 million square meters of space there, significantly larger than the entire Central portfolio in one of Asia's most vibrant cities. So the West Bund, 10 new developments in luxury and premium retail [ malls ] in Tier 1 and Tier 2 cities mean that, again, if we look beyond the immediate term in Hongkong Land, I think that there are good growth drivers. And indeed, potentially, as we go out to the sort of 5 to 6 years' time frame, a change in the characteristic of Hongkong Land's earnings profile, more away from development properties towards investment property recurring income. Of course, as John said, that is subject to review by Michael Smith, the new CEO. So short-term caution but plenty of growth drivers around the portfolio in all of our businesses as we look out beyond.

Now there's another question here.

This is Karl Chan from JPMorgan. So I have 2 questions. The first question, it's a follow-up on the capital allocation. I wish -- you covered quite a bit already. But just digging a little bit deeper on the Mainland China exposure because I actually just came back from the Hongkong Land resource briefing across the street. And actually, last year, Hongkong Land was still buying land in Mainland China. And then when we asked about the reinvestment, it seems like they are still opportunistic but then they will still be reinvesting in Mainland China, right? So just curious from the group level, what do you think of Mainland China as the geography for your new investment. Would that be a priority? Or because it sounds like just from the sharing just now, it seems like at a group level, we might still be able to -- a little bit more excited about Southeast Asia. So just curious a little bit more on that. And then my second question is just about the disposal opportunities. Are we thinking of any like disposal opportunities, especially among core assets? Two questions.