JARDINE MATHESON PROFITS SEEN UP SHARPLY IN 1986
A strong performance by its retail
businesses and affiliates will enable Jardine Matheson Holdings
Ltd <JARD.HKG> to report on Friday a big leap in net profit in
1986, stock analysts said.
    They told Reuters they expect the firm to show earnings of
between 420 mln and 450 mln H.K. Dlrs last year against 157 mln
in 1985.
    The analysts also said they expect Jardine Matheson to pay
a total dividend of 15 to 20 cents a share against 10 cents a
share in 1985.
    James Capel (Far East) Ltd estimates Jardine Matheson's
1986 profits at 450 mln dlrs and attributes most of the income
to retail sales.
    Analysts said the group's 7-Eleven retail stores and its
franchises, among them Canon cameras, Christian Dior luxury
goods and Mercedes Benz cars, produced a strong cash flow.
    Alan Hargreaves of Hoare Govett Asia Ltd also put Jardine
Matheson's 1986 net profits at 450 mln dlrs and said he
estimates pre-tax earnings from retail operations at about 465
mln dlrs against 339 mln in 1985.
    But Hargreaves said Jardine Matheson's earnings from its 35
pct stake in Hong Kong Land Co Ltd <HKLD.HKG> will fall to
about 230 mln dlrs from 281 mln dlrs in 1985.
    The reduced contribution reflects the spin-off from Hong
Kong Land of <Dairy Farm International Ltd> last September.
    Jardine gained a direct holding of 35 pct of Dairy Farm as
a result of the spin-off. Analysts said Jardine will book
revenues from its Dairy Farm stake for the final months of the
year as part of its retail business, which will increase its
overall retail income figures.
    Analysts said Jardine Matheson will also enjoy sharply
increased revenues from financial services, mainly its 50 pct
share of <Jardine Fleming Holdings Ltd>.
    Jardine Fleming yesterday reported record profits for 1986
of 209.5 mln dlrs against 104.7 mln in 1985.
    Analysts said Jardine Matheson made net interest payments
of about 200 mln dlrs last year, slightly below the 213 mln
dlrs of 1985, while the company's term debt remained at about
the 1985 level of 2.7 billion dlrs.
    But Jardine was also subject to increased taxes of 340 mln
dlrs last year against 292 mln in 1985, they said.
    Jardine Matheson is undergoing a series of reorganisations
that will in effect turn it into a holding company for its
diverse interests.
    It previously announced a plan to sell its stakes in both
Hong Kong Land and Dairy Farm to newly created <Jardine
Strategic Holdings Ltd> in which it has a 41 pct interest.
    A company statement issued last month said the firm will
use the proceeds to repay all debt, leaving it with an
additional 500 mln dlrs in cash on hand.
    Though Jardine Matheson will be deprived of a direct stake
in the high-yield Hong Kong Land and Dairy Farm units, it is
likely to develop its own business, analysts said.
    "The future of the stock will depend on the firm's ability
to creatively structure some new acquisitions," said Hargreaves
of Hoare Govett.
    He noted the firm has suggested financial services as a key
sector, and he said it may add some insurance firms to its
existing business.
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