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

Good morning, everyone. I'm Suzanne Cheuk, Head of Treasury and Investor Relations at Jardine Matheson. Welcome to the Jardine Matheson Holdings Full Year 2025 Results Presentation. For those joining us in the room here, you can download the presentation slides from our JM corporate website or at the QR code here. For those joining us online, you should now be able to see the live webcast and presentation slides. [Operator Instructions] Now I would first like to introduce our speakers today. We have Lincoln Pan, Chief Executive Officer of Jardine Matheson Holdings; and Graham Baker, our Chief Financial Officer. As I'm sure many of you already know, Lincoln joined us on the 1st of December 2025. Please join us in welcoming him for his first results presentation. Today, you will hear from him on his vision for Jardines, our commitment to shareholders and how we'll deliver, which we will go into greater detail on the 16th of June during our Investor Day in Hong Kong. Graham will then take you through the financial performance of the company and the portfolio. There will be a Q&A session at the end of the presentation, which I'm sure all of you are very much looking forward to. But for people in the room, I would kindly ask that you hold your questions until then. With that, let me now ask Lincoln to begin our presentation.

Okay. Well, thank you, Suzanne, and good morning to everyone here in Hong Kong and to those who have joined us online. I'm looking forward to an engaging session with all of you today. So thank you again to the many partners of Jardine Matheson, including some of you in this room, who have welcomed me to this great organization. At Jardine Matheson, we have set a clear ambition for ourselves: We strive to be an outstanding investment vehicle focused on building diverse high-quality businesses in Asia Pacific delivering sustainable, top quartile total shareholder returns. Two years ago, our Executive Chairman, Ben Keswick, initiated a transformation process to evolve Jardine Matheson from owner-operator to an investment company. Good progress have been made, strengthening our portfolio leadership teams and boards of industry leaders, setting total shareholder return as our governing KPI and aligning shareholder and management incentives and recycling capital. Today, our job is to accelerate the evolution of Jardine Matheson and our role as an investment holding company, building an organization that's committed to active long-term value creation, talent development with aligned incentives, world-class governance and continuous improvement in sustainability. And whilst we'll lay out more of our strategy and financial objectives in greater detail in our Investor Day in the summer, today, I would like to begin outlining the principles which Jardine Matheson will operate with to deliver for our shareholders. First and most importantly, we're targeting sustainable top quartile 5-year TSR outperforming alternatives for investing in Asia. This will be supported by a commitment to growing the dividend annually and value creation initiatives to drive portfolio performance. Our goal is to be a stable, diversified platform, delivering GDP plus growth and growing cash-on-cash distributions across our markets. Secondly, we'll have an active program to recycle capital, exiting below hurdle assets with limited prospects and recycling capital toward businesses existing and new that improve our quality of earnings. Both our portfolio investments in Hongkong Land and DFI Retail have done an excellent job of this in 2025. In 2025, Jardine Matheson and its portfolio companies recycled $4.8 billion of capital more than the last 4 years combined. Thirdly, we'll principally be a control or lead investor in our portfolio companies. This is a change to our legacy historic strategy. Being a Jardine Matheson company must come with meaning and must come with principles. These include our ability to appoint, incentivize, develop and change management, operating with international standards of governance and a commitment to environmental objectives. From my experience in Asia, this is best done and almost only done as a control investor. And finally, we'll be a lean holding company where practically every resource at Jardine Matheson must be focused on enhancing value and managing risk in our portfolio and thoughtful capital recycling. This is also a meaningful change from our legacy strategy. 2025 was a strong year for Jardine Matheson and its portfolio companies. Alongside the significant capital recycling below hurdle rate return investments at Hongkong Land, DFI Retail, Mandarin Oriental and Jardine Cycle & Carriage, there was a $1.4 billion deleveraging of the JMH parent company balance sheet. The JMH parent company balance sheet finished the year in a net cash position, which provides us with flexibility for future investment opportunities. 5-year TSR at the year-end was 8.8%, up markedly from negative 0.6% a year earlier. We continue to see significant value in our existing portfolio as well. And as a result, we launched a $250 million buyback program for the Jardine Matheson Holdings level in November. We are also investing. There is a misperception that right now, that Jardines is a seller of everything. This is categorically not true. We invested $2.8 billion back into our companies in 2025, and we'll continue to reinvest in parts of our portfolio we believe in. Graham will go over the financials in a moment, but I would like to highlight our dividend per share has increased to $2.35, reflecting a progressive dividend policy, which has delivered annualized growth of 6.4% over the last 5 years. Whilst we made progress in 2025, we still see significant upside for JMH. Our portfolio companies are tightly focused on improving execution, and we are continuing to support this with accountability, the introduction of TSR-linked long-term incentive plans across our businesses and investment in talent for new investments and portfolio value creation. You will see us continue to be more ambitious and active in assessing and recycling capital in our portfolio. We have clear return hurdles for new capital deployment, and we will see opportunities to continue to simplify the group and improve shareholder value as we have done with Mandarin Oriental. We'll share more on our specific capital allocation hurdles and targets and principles later on in June, and we'll begin to work to grow Jardine Matheson's earnings in the future, focused on scalable businesses delivering and diversifying our Asia footprint. These activities are supported by a macro environment in Asia that has been generally improving and which favors permanent capital that can look beyond near-term volatility. I hope you can start to see that Jardine Matheson is a very different company today than in the past. I'll now turn to some of the year's highlights, starting with the privatization of Mandarin Oriental in January. This privatization enabled us to eliminate an inefficient listing structure whilst releasing significant capital for shareholders by selling part of One Causeway Bay, a noncore real estate asset. The privatization will allow our outstanding management team, led by Laurent Kleitman to execute their ambitious growth agenda in a private setting. Importantly, it will also create options for Jardine Matheson to realize greater value from our Mandarin Oriental ownership in the future. The hotel management business is a really exciting business for us and expect to remain a growth driver for the group. Astra delivered robust earnings amid softer domestic conditions and a challenging capital market environment. Despite this, share price growth in the year supported 5-year TSR of 9.8%. Aligned with our TSR strategy, Astra and United Tractors each completed a IDR 2 trillion, or USD 121 million share buyback program in January. They announced a subsequent tranche of share buybacks amounting to IDR 1 trillion each in the same month, which we're now in the process of completing. We expect these buyback programs to continue given the strong value we see in Astra. We are also working with Astra on talent management and incentive alignment as we have done across our other parts of our portfolio. In the first half of 2026, we'll also announce enhancements to Astra's Board of Commissioners. Alongside this, executive succession efforts are ongoing. You'll hear more leadership announcements from Astra in the coming months. Looking forward, Astra will continue to focus on its core automotive, consumer finance and heavy equipment and mining segments while investing in growth segments, for example, like healthcare and infrastructure. We remain committed to investing more in Indonesia and to supporting Astra's capital recycling efforts to drive future growth. I'm personally spending significant time in partnering with the Astra management team and down in Jakarta practically every month with our Astra leadership. 2025 was a productive year also for Hongkong Land as they took meaningful steps forward in delivering the early phases of their strategic Vision 2035, which would transform the business into a more disciplined, capital-efficient and growth-oriented company. The early phases of this transformation focus on capital recycling. Completed or announced net proceeds recycled at the end of February have totaled $3.6 billion since the strategy was announced in October 2024. A major milestone announced in February 2026 was the establishment of the Singapore Central Private Real Estate Fund, Hongkong Land's first private real estate fund. The new fund has $6.4 billion of assets under management with Qatar Investment Authority and APG Asset Management as founding investors. The fund represents a significant milestone in the execution of Hongkong Land's strategy, to build a scalable third-party capital platform, broadening Hongkong Land's investor base and diversifying income through fee-based revenue. This is a good example of Jardine Matheson supporting our portfolio companies in enhancing quality of earnings and a portfolio company leadership executing new strategies at pace. Michael Smith and his team are bringing significant innovation and drive to this business. DFI Retail also made excellent strategic progress during the year. This was led by decisive portfolio actions, including divestment of low-yielding minority stakes in Yonghui, Robinsons Retail and our Singapore Food business. The proceeds from these divestments allowed DFI to pay a $600 million special dividend with Jardine Matheson receiving $465 million. DFI have committed to a 70% dividend payout ratio and have announced a midterm target of $310 million to $350 million underlying profit by 2028. Scott Price and his team have brought execution and focus to DFI. They are laser-focused on executing DFI's strategy and an outstanding team of retailers. Whilst we see value in our existing portfolio, we have and will continue to support share buybacks and share purchases at the JMH and the portfolio company level. These have been substantial over the last 5 years with JMH investing $7.7 billion. At the year-end, we had open buyback programs across JMH, Hongkong Land, Astra and United Tractors. As the company has announced, I am also an ongoing investor in Jardine Matheson, having personally invested about USD 10 million before and after I've started as CEO. This is a commitment I made to my principal shareholders that a CEO must have personal alignment, independent of stock-based compensation. My intention will be to reinvest the majority of my short-term incentive compensation back into Jardine Matheson stock while I remain CEO of Jardine Matheson Holdings. Sustainability continues to be an important enabler of long-term value creation across Jardines and our portfolio. In 2025, we continue to make progress on carbon reduction, aligned with targets we are setting with our portfolio companies. At the portfolio company level, we're seeing tangible improvements in execution with businesses advancing emissions reduction initiatives while also strengthening operational resilience and cost efficiency. We're also seeing improvements across external ESG ratings, which we view as an important validation of our approach as long-term owners and responsible stewards of capital. And now let me pass the presentation to Graham, who will take us through the financials in more details.

Thanks, Lincoln. Jardine Matheson delivered very solid performance in 2025. Our improved execution and heightened focus on shareholder returns at a time when investors have recognized again opportunities in Asia to diversify their holdings resulted in a strong recovery of our 5-year TSR to 8.8% per annum, the highest level in over a decade. Underlying earnings per share improved by 9% to $5.72, supporting a full year dividend of $2.35 a share. You'll recall that in the prior year, we held our dividend despite a drop in underlying earnings. Reported earnings returned to net profit of $1.1 billion, rising by nearly $1.6 billion from the prior year loss. This substantial turnaround primarily reflects the fair value of investment properties, which rose in 2025 in Central after 6 years of revaluation losses. Parent cash flows were robust. And importantly, our parent balance sheet finished the year in a net cash position, providing investment flexibility. Starting with earnings. As shown on the left-hand chart, underlying net profit grew 11% in the year to nearly $1.7 billion. From 2025 onwards, we have updated our definition of underlying earnings to exclude entirely the results of Hongkong Land's build-to-sell or BTS business. 2024 underlying net profit is therefore also re-presented in the chart. This change reflects Hongkong Land's announced exit from BTS and therefore, I believe, will help better understanding of the progress of our ongoing strategic businesses. As this is a change, however, we've also included the chart on the right, which shows underlying net profit under the prior definition. Three things to note here. Firstly, net profit in 2025 is the same on both definitions as net all-in profit from build-to-sell was less than $1 million in 2025. Secondly, that was not the case in 2024 when BTS at our level registered a net loss of $47 million. So if we'd stayed on the old definition, our headline underlying growth rate would actually have been 3% higher, at 14%, than the 11% we've announced today. And thirdly, our result in 2025 on the old definition was 2.6% above the guidance we gave for the year, which you'll recall was for flat earnings, excluding the 2024 BTS impairments. So in summary, a very solid earnings performance in 2025, both in growing our ongoing businesses and against guidance. Looking at this now by business. Our 2 largest businesses, Astra and Hongkong Land, both saw marginally lower contributions in 2025. However, this was more than compensated by growing contributions from DFI, JP and JC&C, once again demonstrating the value of our diversified portfolio. I'll cover the core portfolio companies in more detail in a moment. However, for now, JC&C saw an improved contribution from Vietnam and also benefited significantly from foreign exchange gains and lower financing costs at the corporate level. Our outside-in estimate of Zhongsheng's contribution is 23% below the prior year, linked to the bottom end of the range of analysts' estimates, following a disappointing result in the first half of the year and ongoing pressures on margins from oversupply in the mainland new car market. Finally, we benefited in 2025 from a significantly lower set of corporate charges, $67 million below the prior year due to higher investment income, lower financing costs and lower corporate overheads. Outside underlying earnings, the group recorded a net nontrading loss of $572 million, well below the nearly $2 billion charge in 2024. As mentioned before, the main change was in the valuation of Hongkong Land Central portfolio, which rose in 2025, the first increase since 2018, principally driven by the retail portfolio. Within impairments, the major item was against the carrying value of Zhongsheng, reflecting its deteriorating share price and challenging market outlook. On the group's balance sheet, net borrowings, excluding Astra's financial services companies, fell by $4.6 billion to $2.7 billion, and gearing fell from 14% to 5%. This was driven by debt reductions at almost all portfolio companies and at the JM parent company level. Financial services net debt moved marginally upwards in line with growth of the business' lending portfolio. Group cash flows from operating activities for the year were $5.3 billion, up 6% with stronger cash generation at DFI, Astra and Jardine Pacific. Investing activities generated a net inflow of $2.1 billion compared to an outflow in the prior year. Organic capital expenditure in our subsidiaries, together with investments in joint ventures, in total grew 17% to $2.8 billion. However, while we continue to grow our organic business investments, we also saw $4.8 billion of capital recycling from, among other things, the sales of Yonghui, Robinsons Retail and Singapore Food by DFI; 9 floors of One Exchange Square, MCL Land and MBFC Tower 3 in Singapore by Hongkong Land; the top 13 floors of One Causeway Bay by Mandarin Oriental; part of its Vinamilk stake by JC&C; and other listed investments sold by JMH Parent. Lower cash outflows from financing activities mainly reflect lower share purchases by Jardine Matheson of its subsidiaries, principally of JC&C and Mandarin than in 2024 as we prioritize debt reduction in our holding structure for much of the year. The group has $15 billion of liquidity headroom to finance future growth. Overall, the group's portfolio companies continue to be highly cash generative, supported by strong balance sheets and access to considerable liquidity. Now turning to Jardine Matheson's corporate balance sheet and cash flows at the parent company level. Parent free cash flow rose 7% to $933 million and cash cover for the Jardine Matheson dividend remained ample at 2x. The parent company balance sheet, as mentioned, finished the year in a net cash position following net debt reduction of $1.4 billion during the year. The clean closing net cash position comprises 10- and 15-year bonds totaling $1.2 billion issued in 2021 at an effective interest rate of 2.6% and $1.2 billion of corporate cash held at leading high-quality regional and global banks, which together with further substantial committed facilities, gives the group ample flexibility for new capital deployment. I'll now go through the performance of our core portfolio companies. For details, do refer directly to our company's respective results briefings. Looking first at Astra. Unless otherwise stated, the numbers on this slide are all shown in local currency, and like all the other portfolio company slides, are on a 100% basis. Astra saw positive progress in its 5-year TSR to 9.8% per annum, benefiting from a strong share price recovery in 2025. As Lincoln mentioned, Astra and United Tractors both launched buyback programs during the year aligned to TSR strategy. Net profit in local currency was marginally down at IDR 32.8 trillion, amid a softer domestic economy with lower contributions from the coal and 4-wheeler businesses as coal prices moderated and the auto market contracted, partly offset by improved performances in motorcycles, consumer financing and noncoal mining. Astra's contribution to JM's underlying net profit also fell modestly with a weakening rupiah offset by an increase in JM's effective shareholding. Astra's net cash position remains strong, providing capacity to fund its strategic priorities. Astra is, of course, a core part of Jardines. We continue to have confidence in its long-term prospects and will continue to support its investments in driving value and growth in its core franchises. Hongkong Land has also seen a major improvement in 5-year TSR as it makes meaningful progress against its Vision 2035 strategy. At the end of February 2026, Hongkong Land had recycled $3.6 billion of capital since the new strategy was announced, representing 90% of their announced 2027 target. Accordingly, net debt fell by $1.5 billion in 2025 to $3.6 billion. And Hongkong Land, of course, made the same change as Jardines to exclude BTS from underlying earnings. Underlying net profit on this basis fell by 8%, principally due to lower average office rentals and the temporary impact of the landmark renovation on retail income in Hong Kong. However, recurring dividend income to JM increased 5% to $271 million, reflecting Hongkong Land's commitment to grow dividends per share over time. Build-to-sell net profits recorded as a nontrading item were, as mentioned earlier, negligible after further impairments were taken against the residential portfolio, mainly in China. However, good progress was made in recycling capital from completing BTS projects, with inventory sales of $800 million in the year. DFI's 5-year TSR also recovered strongly to 5.1%, with a 1-year TSR of over 90%. After paying a special dividend of $600 million to shareholders, DFI finished the year in a net cash position, providing it with capacity for continued investment in its stores, technology and future strategic priorities. In total, JMH received $575 million of dividends from DFI in 2025. Mandarin Oriental's 5-year TSR was 13.5%, supported, of course, by the privatization. Mandarin finished the year with $856 million net cash following the disposal of the top floors of One Causeway Bay. Part of this, after meeting CapEx needs, was used to pay a special dividend of $758 million to shareholders, including Jardines in January 2026. And part of our share was in turn used to fund the privatization. Underlying net profit rose 8% to $68 million with higher contributions from the Hong Kong and Tokyo properties. Jardine Pacific reported higher underlying net profit of $191 million, up 28%. Its Engineering and Infrastructure businesses reported a 10% increase in underlying net profit, while the consumer businesses reported, as part of others, returned to profit. We're actively making people-investments to strengthen engineering and infrastructure and looking to recycle capital into this segment to expand and grow. We're excited about the prospects of Gammon Construction in Hong Kong and of JEC regionally and actively investing behind these management teams. And Jardine Pacific continues, of course, to provide a valuable flow of recurring dividends to the JM parent. Finally, looking ahead to 2026, I'd like to note that as a result of the tremendous work in 2025 on capital recycling and simplification activities, our underlying earnings will exclude a number of items that contributed in 2025. Principally, these are the disposals of DFI and of our Vinamilk shares. Additionally, we will shift in 2026 to accounting for Zhongsheng as an investment rather than an associate. So that only dividends rather than a share of earnings from Zhongsheng will be recorded in our underlying earnings. After adjusting for these changes, our pro forma 2025 underlying EPS exit rate base for your 2026 estimates is $0.39 lower at $5.33. And with that, I'll hand back to Lincoln.

Thank you, Graham. So to conclude, 2025 was a productive year for Jardine Matheson as we continue to evolve from an owner-operator to an investment company. Across the portfolio, we recycled $4.8 billion of capital and underlying net profit grew 11%. At JMH itself, parent free cash flow increased by 7%. The dividend is proposed to grow 4% to $2.35 and the balance sheet moved to net cash, providing investment flexibility. And in recognition of this, we're pleased to see 5-year TSR improved to 8.8%. However, these are just baby steps to turning Jardine Matheson into the outstanding Asian vehicle we envisage, and there remains a lot to do, both on our portfolio and for new investments. We're going to push ahead in 2026 to drive performance as a lean and focused investment company. We'll continue to actively recycle capital. We're strengthening our investment team, and we're actively looking for new pillars to grow our earnings in the future as we strive to deliver top quartile TSR. Turning to guidance. Given the current uncertain political environment, both globally and in some of our key markets, we expect underlying earnings in 2026 to be broadly in line with the $5.33 base Graham just mentioned. However, the resilient returns and cash-generating capacity of our portfolio as well as comfortable cash cover gives us confidence to guide to a full year JMH dividend for 2026 of at least $2.45 per share, up a further 4%. At our Investor Day on the 16th of June in Hong Kong, we'll lay out in greater detail how we are executing against our strategy and financial objectives. We'll cover our capital allocation strategy and then also share our vision for what Jardine Matheson can become. We're making progress as an organization. I need us to move faster and with deliberation, and I'm pushing the organization to do so. Thank you. And we will now open the floor for Q&A. So Suzanne, over to you.

Thank you, Lincoln. We will now take your questions. So please just raise your hand if you have a question. Please state the name of yourself and your organization. Karl?

This is Karl Chan from JPMorgan. First of all, Lincoln, nice to meet you. Finally, we get to meet. So obviously, the first question is more for you. So just curious what is your personal KPI for yourself after you onboarded in JM? And what's your #1 priority this year? So I think investors will be curious to know. And that's my first question. My second question is on capital recycling. So obviously, we have done quite a lot last year. So just curious what's next? And then what would be our strategy or major direction or plans for capital recycling? That's my second question. And my last question is, in your perspective, what is the best way to narrow NAV discount? So obviously, I think, say, when we look at Hongkong Land results, I think the key priority from Hongkong Land is also on narrowing the NAV discounts, right? So from your perspective, what is the best way to do that? That would be my last question.

That's a lot of questions, but thank you, Karl, for -- nice to meet you as well. I can first go through my KPIs. And these are not theoretical KPIs, this is what was approved with our Board of Directors yesterday. So my principal KPIs are split into 2 parts: financial and nonfinancial objectives. My financial objectives, like, for this year is to drive -- first objective is to drive underlying cash flow above our portfolio budget. Now why above? Well, you don't need me to deliver the portfolio number. You have executives within the company who are responsible for delivering it. Why we exist at JMH is to create additional alpha within our portfolio. So I measure myself as -- if I just sit back and our portfolio delivers, it isn't good enough. We need to generate above and beyond, cash flow what they are delivering, which again is our purpose. The second is we have a capital recycling number, and this is a sell number, which is we're targeting a certain number of closed transactions to recycle and generate additional exit capital for our businesses. So those are my financial KPIs. My nonfinancial KPIs is to kickstart our investment program, which combines starting to look at new transactions, ideally putting forward transactions to an investment committee, hiring and improving our team. And then I've also taken a specific KPI for Astra 1-year TSR. Given the importance of Astra for our business, I hold myself personally accountable to drive that business. Those are my short-term incentives. My long-term incentives, which come in the form of stock-based compensation, are principally tied to absolute TSR targets for JM over a 5-year period. And the vesting of those options are in 5 years and tied to delivery of TSR at that time. Those are KPIs. In terms of priority, we need to build the team. This -- we are -- it is a change culture we're getting to at JM. Being an owner-operator, you have very large functional organizations in a sense to command and control and put compliance around your portfolio companies. We're back into a world of recycling capital. So what do you need? You need investors. You need people who are accountable, know how to manage businesses, know how to partner with our portfolio companies. So there's no bigger priority right now than getting high-quality investment professionals side-by-side with me to help us drive the business forward. In terms of capital recycling, there's 2 sides of this: There's selling and there's buying; and putting that capital to work. In terms of selling, the way we look at it is, we have absolute TSR targets we're trying to achieve. Anything that we don't think is going to achieve that is going to be in play, right? Some businesses, we may have turnaround plans and performance improvement plans that get the long-term improvement of that business better. But there are some assets in our portfolio we just don't think is going to deliver our long-term hurdle rate. So those businesses, we're actively looking to divest, partially sell down and find other ways to get capital out of them. In terms of new businesses or new capital allocation, our buyback program is an example of where we see value. Our buyback program in Astra is an example of where we see value. We will, at some point, look at new things, right? I know some of our investors would like us to recycle capital within our organization and just move capital around. That is not why I'm here, right? Jardines needs new pillars for growth. And one of the things we've worked on with our Board the last week is setting guidelines for what good acquisitions will look like, and that's something we'll get into more in June. And the last thing is, NAV discount. You should go talk to the investors on what matters to them. But for me, kind of on a pure corporate finance basis, a NAV discount exists when people see the capital is dead asleep, right? What we're trying to do is show active management of capital, movement from lower to better quality capital. We're just going to do this. Whether people want to adjust the NAV discount, is out of our hands.

Thank you. Raymond?

This is Raymond Liu from HSBC. Welcome. Great to meet you again, Lincoln. So I got 3 simple questions here. The first question is actually about -- something similar about priorities. So like in the PowerPoint presentation, we see there's a lot of priorities, a lot of objectives you want to achieve. So like, can you share with us like what are the 3 key major priorities that you want to achieve, so that to improve JM, to be transform a much stronger JM down the road? This is the first question. And the second question actually is about capital recycling. Like if you look at the capital recycling in 2025, it was amazing, close to USD 5 billion. So should we expect the momentum to continue in terms of capital recycling in 2026 or onwards? So the last question is about Mandarin Oriental. So following the privatization of Mandarin Oriental, so can management share with us more about -- like, how it's going to unlock the value of this hospitality business?

Okay. I'll give you 2 priorities. You asked for 3, right, but we should prioritize. So actually we really have 2. Team, Astra. That's where my time is, build the team, focus on Astra, get Astra to think about TSR and how they can generate value, no different than how Michael Smith, Laurent and Scott Price do. That is my operating priority, to really help Astra get to that next level. Again, with some management changes coming in the coming months, I think we're very excited about partnering with them to do this. So that's it. I don't have a third priority at this point. Capital recycling, please don't take $4.5 billion and straight line it for the next 5 years. It is completely not within our control. Like, there's stuff going on, right? The stuff -- like, we, at the JM level, have capital recycling efforts at assets where we control practically 100%. Hongkong Land has their own capital recycling program, which Mike has talked about. Scott has his own capital recycling program, which he is driving. But what we can drive is the rest of JMH. Astra has their own capital recycling program. It's the other parts of the JMH portfolio where we practically control -- we either control or largely control, we're going to be actively driving recycling there. And then on MO, we're just at the beginning of opening new locations. I mean, to be frank, like every time I open LinkedIn or I get an MO feed, they're opening something somewhere else, right? So as you can see, we're super excited about this. We are back in a position where this brand is growing again. So we want to give Laurent and his management team the next couple of years to grow this, right? It's doubling the number of hotels we manage. It's not a -- I would say it's a very realistic ambition. If we're able to do that and keep seeing long-term pipeline, then we can talk about long-term equity value and what we want to do with it. But the reason we wanted to privatize MO is just give them 100% focus on driving new high-quality hotel openings.

This is Jeff from CLSA. So my only question would be maybe want to hear Lincoln, your assessment on what is the asset-light strategy for Jardine Matheson as we look beyond the next 3 to 5 years? And maybe on top of that, is there any particular sector or geography that you are the most interested in?

Look, I always look at a business like this and the scale and size, it's like a big boat, right? And sometimes boats lean too much in certain directions, right? We are a very asset-heavy business. And not to say asset-light is better than asset heavy. It's just about relative risk. You want different types of risk within your earnings profile. It's just like we don't want 100% of our earnings to come from one place. In a sense, right now, we are actually too concentrated in earnings from 2 locations. Diversification from it is a good thing. right? So this is how I look at my job as a capital allocator within Jardine. It isn't to say that thing is beautiful and amazing, let's run there. It's all about relative risk. Our shareholders need dividends. Our shareholders want steady EPS and DPS growth. So us going and putting $10 billion in AI, that's -- there are better people to go invest with to get that allocation. We're about balancing the boat here and giving steady returns and a growing dividend. That's what we want to do. Now to take examples of what we call an asset-light business, you don't need to look outside Jardines. Look within Jardines. Mandarin Oriental, hotel management business is an asset-light business. We don't need a ton of capital to open new hotels. We're partnering with great location owners to bring our hotel brand to them. Why we've highlighted Jardine Engineering? This is another example of an asset-light business. This is a services business that does a lot of hard asset management and support. That is an example of a business that compounds much easier than, say, real estate where you put money in the ground, you need to wait 5 years to get capital back. It's not to say one is better than the other. We just have a lot of this, and we need some other types of growth. You can ask Graham questions, too.

Yes. Just you put a lot of emphasis on the KPI, i.e., the total shareholder returns targets, and I saw that you did quite well, on 8.8%. Do you have any target in mind? And when you talk about hurdle rate being one of the criteria for your M&A or capital allocation, can you give some more color on that? That's the first one. The second one, I think, I'm not sure whether it is for Graham, just on the assumption that this year or the guidance that this year, the earnings going to be stable year-on-year. Can you give us some more color on how do you come up with that guidance? And secondly, just again, your amazing job in turning net cash on the holding company level. Given that now obviously, Lincoln ticking up a lot more proactive job in terms of capital recycling, do you have, in your mind, what sort of level would be a more ideal level of net debt or net cash on the holding company?

Do you want to go first?

Sure. I mean, obviously, in coming up with our guidance, we go through a long and detailed bottom-up process with our portfolio companies. And to a very large degree, we are reflective of what they have in their forecast and what they and their Boards see as a sensible outlook. Right now, of course, of the last week -- last 2 weeks, we've been placed in a world where there's a whole new sort of left field element of uncertainty arisen. And we also see political uncertainty in 1 or 2 of the markets that we are heavily invested in. And so at this point in the year, I think it's -- it would be heroic to say we know exactly how things are going to conclude and how quickly probably, is the most important thing, they're going to conclude in the Middle East. And so despite having good confidence in our businesses, we have to be modest and recognize that there's a more than ordinary amount of uncertainty at this point in the year. We'll obviously come back to that as we get to the half year, and we'll obviously know a little bit more about how the year is going to shape up. In terms of an ideal level of gearing, look, I mean, Lincoln being brought into the company, I suppose, initially might have made some people think, well, sort of, "Is Jardine turning into a private equity firm, and we're going to gear up the balance sheet to, no disrespect, 6x EBITDA and where, here we go?" That is one thing that is not changing. We will continue, and I think Lincoln is very positive about this, to run our businesses prudently and with a high degree of margin for error and indeed, margin for taking advantage of opportunity within their balance sheets. But we don't have a number. I'm not managing to 5% down to that number. That's the output of actions that have been undertaken through the portfolio companies. And as you probably heard through the presentation, the point of doing that is not to sit on a big pile of cash. It's to be ready to invest in finding those new opportunities, both within the portfolio companies in adjacent areas to their existing franchises and the core parts of those franchises that we believe have good prospects for returns and growth in the future, but also at our level in looking to build new verticals that we can potentially see as long-term growth drivers for the group as a whole. So look, there's no rule that says we have to be single-digit gearing. You've seen over the last 5 or 6 years, we've been well beyond that, but don't expect us to be popping up in a couple of years' time with 70% gearing. It's not going to happen. That's not who we are.

Okay. So then, your first question. Look, the way I look at what we have to be, right, it's a war for capital out there, right? Investors have infinite options to put their capital. So for us to be -- what I want us to be is an outstanding option or a top-of-mind option if people want a diversified Asia allocation, right, of a managed portfolio, I want them to look at us. Now what is that benchmark? Well, there's a whole bunch of ways that capital allocators can invest in Asia. You can invest in indices, you can make your own basket and portfolio. You can put it in private capital. So for me is we are liquid, which is an advantage. People can come in and come out at any time. But we want to be that option. If somebody is looking to beat index but not be locked up for 5 to 10 years, we want to be in that sweet spot of hitting that total shareholder return on a regular basis. I think if we're able to do that, we'll be as competitive as capital as anything. We will not use relative TSR. Like I don't think -- I do not think about our performance relative to other conglomerates in Asia, but that is not a high enough benchmark for us to clear. We -- and that's not how investors see us. No one has an Asia conglomerate allocation in their portfolio, maybe some people do. I -- some may be surprised. But you're competing for this capital, right? You're competing for high net worth capital, you're competing for institutional capital. If you're not in that sweet spot, there's no reason for people to invest in us. So again, that's how -- we will present this in June in more detail. Graham does not want us to give a specific number at this point. But I think it's the right thing to do as we continue to refine it. But that's how I think about this, right? Like, we need to be fighting for capital to invest in that's out there every time we go out there.

Yes, George.

This is George Choi from Citi. Just one quick question. So over the last 2 years, we've seen a number of your major subsidiaries doing a number of major moves to enhance total shareholder return and obviously, a very decent job at that. But JC&C seems to be lagging behind a little bit. So just wondering what the reason behind that. Is it -- does it have to do with the complicated structure at that level?

JC&C is an intermediate holding company. That's all it is. Don't expect it to have a TSR strategy. Astra, we have a TSR strategy. Underlying assets, we have TSR strategies. But JC&C is -- again, it is not an asset we're looking to put more capital to grow with.

It's essentially an extension of Jardines. It's just part of our holding structure, and everything that they do will be aligned with what we do. So there's no point talking about separate strategies because they are very, very closely integrated with us as part of the holding structure for the group.

We have to respect the shareholders that are in JC&C, and we have to put the appropriate regulatory support for those shareholders. Outside of that, I look at our JC&C team and the Jardine Matheson team as one team.

This is Ben from UBS. So I actually have 2 questions. So the first one would be regarding on Astra. So there has been some uncertainty on the mining business in Indonesia. So do we have any current plans on what to do with this part of business? And do we see Indonesia and also mining business as a core part of our investment going forward? And on the second part is, so we've done a lot on capital recycling and improving shareholder returns on our listed subsidiaries. So on our non-listed part, Jardine Pacific, do we have any plans on what we're going to do with it in the future?

Great questions. So the first thing, let's talk about what mining in Astra is, right? Mining in Astra is a combination of heavy equipment leasing, mining contracting and actual ownership of mines. So if -- now you need to break that up. The mining contracting and heavy equipment financing, leasing make up 80-plus percent. right? So mining ownership as a relative profit contributor is a smaller part of the business. It's not just what Astra does. So there's often a misconception about what this business actually does. The mining contracting business is a much less asset-heavy business than a mine ownership business. We have been in the news around our mine ownership with Martabe. Where we stand right now is we are constructively working with the Indonesian government. We have been long-time investors, long-time believers in Indonesian market, and we remain confident that due process and fairness exists in the market. And I think we'll got up to a constructive conclusion with our discussions with the government around our ability to operate the Martabe mine in the future. Jardine Pacific, if it's not blindingly obvious from how we're trying to position it is, I love our engineering and infrastructure businesses in Jardine Pacific. We should build that as a business. right? So Elton Chan, who's running that vertical from us, we should think and talk about Jardine Engineering and Infrastructure. We have great partnerships with Schindler. We have great partnerships with Balfour Beatty and Gammon. Both of those businesses are benefiting from the rebound with the Northern Metropolis here in Hong Kong. We're really excited about the growth of those businesses. JEC, as I mentioned earlier, is an asset-light way for us to grow the business. I think asset services, right, things like HVAC maintenance, maintenance services, is a good asset-light compounding growth vehicle for us that we need to push beyond Hong Kong, right? And Elton Chan has pressure to expand that business for us. So I think you'll see us talking about that business more. Jardine Pacific, I'm not -- when you -- as an outsider, you read Jardine Pacific, it's very hard to understand. But you look at Engineering Services, you look at Infrastructure Services, there are synergies we can build around the assets we have now. I think you'll see this come out in our strategy discussion in June.

And that, of course, is consistent with our other private business, which is the Mandarin Oriental, which, of course, has a strategy built around compounding returns out of an asset-light business. So at least 2 good reasons to think about the JM parent level with assets that you can't access otherwise.