Jardine Matheson Holdings Ltd

SGX:J36

Earnings Call Analysis

Jardine Matheson Strong H1 2023 Performance

In the first half of 2023, Jardine Matheson demonstrated robust financial health with total revenues steady at $18.3 billion, mirroring the previous year. Underlying net profit rose to $823 million, marking a growth of 10% over 2022 and 11% compared to 2019. Underlying earnings per share increased by 9% to $2.84, and dividends grew correspondingly by 9% to $0.60 per share. Strategic moves included Astra's investment in sustainable mining assets totaling $902 million and a focus on digital initiatives bolstered by partnerships. Additionally, Jardine's sustained its commitment to diversity and sustainability, while managing lower contributions from its motor interests and higher corporate costs post-privatization of Jardine Strategic.

Positive Performance and Growth Prospects

The company exhibited a strong performance in the first half, with significant earnings growth driven by improved operations across most divisions, particularly the Automotive, Financial Services, and Heavy Equipment and Mining sectors, which collectively represent over 95% of Astra's profits. Noteworthy was the Automotive division, which saw a 35% boost due to higher sales. Strategic changes have been made in anticipating future EV markets, with Zhongsheng, for instance, venturing into vehicle repair services and partnerships in China, preparing for the EV transition.

Robust Financial Position

Financial prudence is evident with the reduction of net borrowings by $600 million, lowering the gearing ratio from 13% at the end of 2022 to 12%. The impressive cash flow generation from operations has contributed to this debt reduction and indicates a strong balance sheet. The undrawn borrowing facilities stand at about $13 billion, equipping the group with substantial capital ready to be deployed for future growth opportunities.

Challenges and Opportunities

Despite some challenges including labor shortages and competitive pressures, such as in the Consumer business with Jardine Restaurants, the group navigates through a landscape of geopolitical and economic uncertainties with optimism. The strategic focus is to harness opportunities in Asia to achieve sustainable, long-term growth and reduce net gearing. The management expresses no rigid target for gearing levels but aims for continued prudence and flexibility to seize investment opportunities when they arise.

Investment and Divestment Strategies

The group has been actively balancing acquisitions and asset disposals. Investments are primarily directed towards adjacent businesses, with capital largely deployed to expand in currently related fields, while maintaining the possibility of modest advances into new sectors. Asset disposals are considered if they provide value to shareholders and a stronger ownership case exists with potential buyers. Though no specifics were disclosed, the management reassures the robust performance of their portfolio pieces.

Outlook on Subsidiaries and the Asia Market

A key subsidiary, Hongkong Land, continues to face market sentiment challenges due to the reluctance of global investors to invest in China, despite the company's stable performance within the premium property segment and luxury retail malls. While the share price performance doesn't fully reflect the company's stability, there is confidence in its mid- to long-term growth prospects, backed by the growing economies in Asia. The company remains open to increasing stakes in undervalued subsidiaries consistent with their strategic focus.

Long-term Focus on Sustainable Growth

The group strengthens its position with a long-term vision for sustainable growth, both through traditional business operations and upcoming trends like the EV transition. The optimism is underpinned by the prosperous economic outlook in Asia, and a commitment to sound financial health ensures resilience and the potential for proactive capital deployment.

Earnings Call Transcript 2023-Q2

[Graham Baker, Group Finance Director & Executive Director]

Good morning, and welcome to the Jardine Matheson Half Year Results Webcast. I'm Graham Baker, Group Finance Director. You should be able to see the slides on your screen and a Q&A box at the bottom of your page. Please submit your questions at any time and I will answer them at the end of the presentation.

This morning, I'll update you on progress against our group's strategic priorities. I'll then take you through the financial performance of the group and our individual businesses. We'll end with the outlook and Q&A.

Starting with progress on our strategic priorities. Astra has made 2 further tangible steps in evolving its mining portfolio to a sustainable future. Astra has agreed to acquire a 90% interest in the nickel mining and processing businesses, PT Stargate Pasific Resources and PT Stargate Mineral Asia for $272 million, and United Tractors has agreed to acquire a just under 20% stake in nickel industries, a leading nickel mining and processing company listed in Australia with a growing portfolio of assets in Indonesia for $630 million. Both transactions remain subject to conditions precedent, but aligned with Jardine's and Astra's commitments to diversify from coal and give concrete capital support to Indonesia's energy transition. We've also continued to release capital from noncore assets and simplify the group's portfolio with sales of our U.K. motors business, and DFI's disposal of its Malaysian grocery retail business.

Turning to innovation and operational excellence, JEC, Gammon, Jardine Restaurant, Zung Fu and Hactl all continued to make good progress in the period, driving greater efficiency and productivity in their businesses. Hactl, for example, introduced robotics into some of its goods handling operations and automation more generally in areas such as part sourcing and fleet management systems. We've also seen successful early transitions in Jardine Pacific into our new business services operation in Foshan , which brings us closer to driving improvements in our core back office data, processes and systems.

Turning to customer-facing innovation, Astra continued progress with its partner WeLAB towards the planned launch of a digital bank following the acquisition of PT Bank Jasa Jakarta, which will provide a wide range of online financial services to the underbanked market in Indonesia. Astra also agreed to acquire Tokobagus, a leading Indonesian online classified adverts platform, operating under the OLX brand. This used car platform builds on Astra's existing online business and opens further opportunities beyond.

DFI continued to build its digital capabilities with its new customer loyalty program reaching more than 4.5 million members in Hong Kong and 1.2 million members in Singapore. And in June 2023, JC&C announced a used car and aftersales partnership with Carro , Singapore's leading AI-driven online used car platform.

As part of our third strategic priority, enhancing leadership and entrepreneurialism, we aim to create a diverse and inclusive culture where everyone can succeed in Jardine's. Our diversity and inclusion strategy has introduced targets into senior leaders' KPIs and factored them into annual performance reviews as well as making D&I learning programs part of our onboarding process. Diversity and inclusion relies on developing and retaining exceptional leaders and is the foundation for achieving our wider strategic ambitions. It also includes being open to attracting sectoral expertise from outside the group.

And during the period, we announced Chief Executive leadership transitions in DFI and Mandarin Oriental. At Jardine Matheson itself, we made a further step forward in enhancing governance with the appointment of Janine Feng as an independent nonexecutive director. Janine brings valuable expertise and experience to our Board, both as an independent nonexecutive and as a seasoned leader with many years experience at Carlyle . Finally, with changes to membership of JM's Audit Committee, the Board considers it now comprises only independent nonexecutive directors.

The group continues to drive our sustainability agenda with a focus on making Jardine's both a stronger business and a stronger contributor to the communities we serve. At the end of May, we published our second group sustainability report, which highlighted progress against the 3 key pillars of our sustainability agenda: climate action, responsible consumption and social inclusion. In some areas, of course, we're just at the beginning of our journey, but we are committed to making sustained progress in all areas over time.

On climate action, our businesses have been setting decarbonization targets and identifying the pathways needed to achieve those goals. Hongkong Land and Gammon have both secured approval from SBTI for their respective 1.5 Celsius aligned near-term targets. And Hactl has submitted its commitment letter to SBTI as well. Meanwhile, DFI has committed to 1.5 Celsius line Scope 1 and 2 targets for 2030 and '50. At the group level, we are embedding sustainability into our capital allocation decisions, which together with the businesses work on decarbonization will support a group-wide CO2 commitment in due course.

On responsible consumption, we're focused on reducing waste by strengthening waste management and exploring circular solutions that we can deploy as a group. During the first half, we saw DFI, Maxim's and Jardine Restaurants Group, start to work together to consolidate food waste from their businesses and send it to JEC's I·PARK waste-to-energy facility in Hong Kong.

Finally, on shaping social inclusion, we continue our focus on promoting education and health initiatives and supporting livelihoods in our communities. Our sustainability strategy is supported by a group-wide volunteering program, which contributed over 33,000 volunteer hours in 2022 and continues to go from strength to strength this year with activities in all our key markets.

Turning now to the group's financial performance for the first half. We saw a strong overall performance in the first half of 2023 as our businesses continued their post-pandemic recovery. Total revenue for the first half was $18.3 billion, in line with the same period last year. Underlying net profit was $823 million, 10% above 2022 and 11% ahead of pre-COVID levels in 2019. Underlying earnings per share were $2.84, up 9% against the first half of 2022. The Board has declared an interim dividend of $0.60 per share, also up 9% from last year. The group continues to benefit from its diversified exposure to our key growth markets of Asia and saw 58% of its earnings coming from Southeast Asia in the period while China contributed 37%.

Looking at the numbers in a little more detail. Our reported first half underlying earnings growth of 10% and underlying earnings per share growth of 9% continued to offset foreign exchange headwinds, principally on the strength of the U.S. dollar against the Indonesian rupiah and the RMB. At constant exchange rates, growth in underlying earnings was therefore 14% and underlying earnings per share, 13%. Within the group's overall performance, the first half saw a record contribution from Astra, which was again the group's largest growth driver. Recoveries of DFI and Mandarin Oriental also made substantial contributions to growth.

I'll cover the performance of each business later, so we'll note just 3 further points here. First, a substantially lower contribution from Jardine Motor interests, which principally reflects the impact of the slowdown in the Chinese mainland car market on Zhongsheng, following a record performance in 2021, the tail end of which we reported in JM's first half results last year. It also reflects the sale of our motor operations in the United Kingdom, and to a small extent, our new accounting approach for Zhongsheng, which I'll cover later.

Second, lower corporate costs in the first half of 2023 compared to the prior year, principally reflect unrealized mark-to-market gains on certain investment funds, reversing similar unrealized losses recorded in 2022. And finally, higher group corporate costs in both 2022 and 2023 then back in 2019, principally reflect increased parent financing costs as a result of the privatization of Jardine Strategic.

Looking back over the period as a whole since 2019, the group has grown underlying earnings per share by $0.88 or 45%, and interim dividends per share by $0.16 or 36%. As I think you will all understand, these very strong progressions reflect 2 main factors. Firstly, 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 $0.68 to underlying earnings per share across the period, a little over 3/4 of total growth.

And secondly, now with the reopening of economies across the region, improved underlying performance from the group's broadly diversified portfolio contributed around $0.20 or just under 1/4 of the program. Outside underlying earnings, the group recorded a net nontrading loss in the first half of $257 million. This was mainly a net unrealized loss of $482 million on the usual revaluation of investment properties during the period, primarily in Hongkong Land, which was partly offset by an increase of $54 million in the fair value of the group's other investments.

We also recorded gains on business and property sales, which are routine in nature. The only additional nontrading item of note is the group's share of Zhongsheng's results in the second half of 2022. Zhongsheng's own interim and annual results have historically been reported after our results announcement. In previous years, therefore, we recognized our 21% share of Zhongsheng's results based on publicly available information, in other words, 6 months in arrears.

Recognizing the growing importance of Zhongsheng to the group's performance, going forward, we believe a better representation of their current performance will be given by reporting their results on a calendar year basis. Accordingly, the $89 million of underlying profit reported for the first half of 2023 reflects an estimate of our share of results for the 6 months ended 30th of June 2023, using recent analyst forecasts for the full year and our own estimate of the share relating to the first half.

Our share of profits for the GAAP period of $101 million representing results for the second half of 2022, has therefore been presented as a nontrading item. This ensures that we only include 6 months of results in underlying profit and that the results of the GAAP period are nevertheless included in the group's cumulative profit and reserves.

Moving to the group's balance sheet. Net borrowings at the 30th of June, excluding Financial Services fell by $600 million to $6.9 billion. Gearing dropped from 13% at the end of 2022 to 12% as profitability improved and net borrowings fell across most group companies. At Jardine Cycle & Carriage, consolidated net cash, excluding Astra's financial services subsidiaries, decreased to $777 million at the half year, mainly due to Astra's enhanced 2022 final dividend payout to its shareholders.

At JC&C's corporate level, net borrowings dropped from $1.5 billion to $900 million at the half year as a result of the higher dividend received. At Jardine Matheson Corporate, lower net borrowings at the end of June, mainly reflected proceeds from the sale of the group's U.K. motor operations, partly offset by share buybacks and small share purchases in group companies as well as capital calls into investment funds.

Turning now to cash and liquidity. Cash flow from operations was higher in the first half of 2023, with higher operating profit and dividends from associates and joint ventures, which reflected recovering trading conditions and growth across most of the group's businesses. Investing activities generated a net cash inflow of $14 million in the first half of 2023, principally reflecting higher inflows than the prior year including repayments from Hongkong Land's property joint ventures, net proceeds from the sale of the group's motor operations in the United Kingdom and the sale and leaseback of Singapore properties in JC&C. Capital investment remains strong with growth compared to 2022, reflecting Hongkong Land's higher development expenditure on the Chinese mainland and Astra's increased investment in fixed assets, particularly in the heavy equipment and mining division.

Higher cash outflows from financing activities in the first half of 2023 were mainly due to higher dividends to noncontrolling interests in Astra of about $1 billion as part of their enhanced 2022 final dividend payment and net repayment of bank loans. Overall, the group's businesses continue to be cash generative, supported by strong balance sheet. The group has around $13 billion in undrawn committed borrowing facilities and substantial capacity to deploy capital to finance future growth.

I'll now briefly go through the individual business 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. I'll start with Astra, which was the largest contributor to the group's underlying net profit in the period. 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 in the first half, with earnings growth reflecting improved performances from most of its divisions, especially its Automotive, Financial Services and Heavy Equipment and Mining businesses, which together account for more than 95% of Astra's profits. The contribution from Automotive grew by 35% as a result of higher sales volumes. Astra's market share Car sales increased marginally to 55% and its market share for motorcycle sales increased to 80%.

Astra's Financial Services division saw increased contributions from its Consumer and Heavy Equipment Finance businesses. The contribution from Heavy Equipment, Mining, Construction and energy rose by 8% despite falling coal prices, supported by better performances from the Heavy Equipment and Mining Contracting businesses. We expect the division to continue performing well in the second half, although the impact of falling coal prices and record comparables in the second half of 2022 will likely impact year-on-year growth. Agri business saw its contribution fall by 58%, mainly due to lower crude palm oil prices. Finally, there was a 38% increase in contribution from infrastructure and logistics as growth in traffic volumes benefited the group's toll road interests.

Our second largest profit contributor was Hongkong Land. Its underlying profit for the first 6 months was $422 million, broadly in line with the same period last year. The Hong Kong and Singapore Investment Properties businesses remained resilient despite challenging market conditions as improving performance from the luxury retail portfolio more than offset a lower contribution from Hong Kong office. Physical and committed vacancy in the Hong Kong office portfolio increased from the end of 2022, but remain significantly below the average vacancy in Central, which in turn remained well below Hong Kong as a whole. Average rents to approximately 4% compared to the first half of 2022.

The Singapore office portfolio continued to benefit from healthy leasing momentum and low vacancy on a committed basis. The landmark retail portfolio in Hong Kong delivered an improved performance during the first half, following several challenging years. There were also higher contributions from the group's central luxury retail malls in Beijing and Macau. In development properties, there was a lower profit contribution from the Chinese Mainland despite profits recognized on acquisition of additional stakes in 2 existing product projects at valuations below cost due to substantially fewer planned sales completions than in the first half of 2022. The group's continued focus on premium residential products in select top-tier cities has resulted in better sales performance than the general market, though the weak economic outlook in China weighed on consumer sentiment.

Looking now at our Motors business. As I explained earlier, recognizing the increased importance of Zhongsheng the group's performance, from 2023, we are recognizing our share of their results on a calendar year basis using an estimate of recently published external analyst estimates. In the first half on this basis, the group's recognized contribution was $89 million based also on our estimated phasing over the first half and second half.

With regard to the 41% drop estimated for Zhongsheng, I'd also note that the prior year comparable of $150 million reflected their record performance in the second half of 2021. And as such, should not be taken as any indication of the year-over-year performance analysts expect Zhongsheng itself to report this year.

Elsewhere in Motors in March 2023, we sold our U.K. business, Jardine Motors Group. And accordingly, the group stopped consolidating the results of the business from February this year. Jardine Pacific reported a net profit of $64 million for the first half of 2023, 10% below the prior year. Most businesses saw flat or improving results as post-pandemic reopening more than offset loss of government support measures. The group's Engineering business has delivered good performance with both Jardine Schindler and Gammon delivering strong profit growth.

In our Consumer businesses, Zung Fu Hong Kong and Macau also saw significantly improved performance with more car deliveries and aftersales jobs. However, Jardine Restaurants reported a net loss as consumers temporarily switched away from our home delivery focused formats to in-restaurant dining following the pandemic reopening and competition intensified in Hong Kong, Taiwan and Vietnam.

Turning now to JC&C. The group reported $40 million in underlying profit in the first half for its businesses outside Astra, a decrease of 31%. The group's direct motor interests delivered a 22% higher contribution, driven by improved performances from Tunas Ridean in Indonesia and Cycle and Carriage Bintang in Malaysia. THACO's profit, however, was 72% lower, largely due to lower automotive profits as the automotive market slowed significantly in Vietnam in the first half and market share was impacted by supply chain constraints.

In the group's other strategic interests, REE's contribution based on its first quarter results was 16% higher due to increased earnings from its water treatment and distribution businesses. However, the contribution from Siam City Cement was 41% lower as it continued to face the adverse impact of high energy costs. Corporate costs were lower as smaller foreign exchange losses more than offset higher financing costs. DFI saw a significant recovery in overall performance. Its underlying profit improved by $85 million in the period as the $52 million loss incurred in the same period last year reverse to a $33 million profit.

Grocery retail profits were lower in the first half. North Asia saw lower revenues than last year when the business benefited from pantry stocking in Hong Kong during the pandemic. In Southeast Asia, profits were impacted by inflation and cautious consumer sentiment. IKEA sales were slightly below the previous year, impacted by a reduced demand for furniture, but underlying profit remained in line with last year, largely due to strong cost control. The Convenience business, however, reported like-for-like sales growth driven by strong recovery of foot traffic and effective execution of new product development and promotions.

Health and Beauty reported 20% like-for-like sales growth. While still below pre-pandemic levels, underlying profit more than doubled in the first half relative to the prior year, supported by a recovery in customer traffic, gross margin expansion and effective in-store execution despite pressure from labor shortages. And the group's associates reported a substantially smaller underlying loss of $7 million in the period compared to a $60 million loss in the same period in 2022. Maxim's reported double-digit sales growth and return to a first half profit while the Yonghui reported lower losses.

Looking lastly at Mandarin Oriental, the group's luxury hotel and management business, delivered an underlying profit of $28 million, a $49 million improvement from the loss of $21 million last year, and more than double levels in 2019. Occupancy across all regions strengthened significantly compared to the first half of 2022 and the management business reported record fee income. Hotels in Europe and the Middle East delivered both strong rates and occupancies with revenue per available room well above both 2022 and 2019 levels. Our properties on the Chinese Mainland and in Hong Kong also saw robust improvement following the relaxation of travel restrictions. Mandarin Oriental continues to have a strong pipeline of future openings with 4 new hotels and a stand-alone residences project announced in the first half.

Turning now to the group's outlook. Strong results were delivered in the first half overall and by most of our businesses. And despite some uncertainties in the geopolitical and economic climate, we expect Jardine's growth to continue in the remainder of the year. The group has a strong balance sheet, and we'll continue to focus on opportunities in our core growing markets in Asia to create sustainable, long-term growth.

Thank you. And I'll now take your questions.

[Graham Baker, Group Finance Director & Executive Director]

Great question, Jayden. Thanks for that. Of course, we have large motor interests, both in the Mainland and in Indonesia. And both of those businesses are, of course, pivoting to the future. How they do that, of course, we'll be slightly different in each market. In the Mainland, Zhongsheng has already announced its new strategy around building a vehicle repair, set of centers situated all across the Chinese mainland. Many of the EV players in the Mainland will look to partnership to provide the critical services that they require when unfortunately, their vehicles are involved in accidents. And Zhongsheng with its very large network and strong brand reputation is well placed, not only to help them, but also to work with other partners that they've established in the financial services sector to continue to provide relevant services to mainland customers.

They will, of course, work with their OEMs. And in the Luxury segment, of course, the transition from ICE to electric vehicles is proceeding not quite the same pace that it is in the wider market. We believe, of course, that those OEMs are very well positioned over time to bring compelling products not only to the Chinese Mainland, but more broadly around the world.

In Indonesia, of course, Astra works with its key partners, Toyota, Honda. And of course, you'll have seen from their announcements that they are pivoting with the change in their leadership and they're changing their strategy towards bringing a more comprehensive offering in the EV vehicle space. Indonesia, both because of price point and because of EV charging infrastructure, we believe, has a few years to go before it sees a sort of transition that are happening in the leading markets in the world, and we believe that Astra will be well positioned with its partners to serve its customers there broadly across the country. That, of course, is all consistent with our sustainability commitments to over time, assist wherever we serve customers in serving fair and just energy transitions.

I think that, that probably covers the sustainability question. So I will, with that move to a question from Jeff King at CLSA. Thanks, Jeff. You also asked a question about Zhongsheng and EV, so I won't repeat on that one. But can I give an update on the capital allocation priority of the Jardine Matheson Group, given the current interest rate level.

I think a couple of points on that. Jeff, firstly, the group has always run a prudent balance sheet and continues to do that. Our fundings are locked in for a significant period into the future, both by having taken advantage of bond markets at advantageous moments and an active hedging program. And so while we, of course, don't do that to 100% level, and we're not therefore completely immune to changes in the interest and rate environment, we -- the impact of that on our bottom line is to an extent, muted.

In terms of our capital allocation priorities, over the last 4 to 5 years, the group has invested nearly $7 billion in privatizations and share buybacks. And therefore, our eye at the moment is more focused on looking for opportunities to build new growth drivers for sustainable growth into the long term. We will, of course, continue to look at both internal and external M&A opportunities on a level playing field, and we will keep that up-to-date as economic conditions and business opportunities develop over time. But for now, our priority is principally there. All of that is underpinned by a commitment to running a strong investment-grade set of credit metrics and so both at the parent company and JC&C parent level, our long-term ambitions to have those businesses operate with clean balance sheets and therefore, having ability -- significant flexibility to invest in new opportunities remains unchanged. Hopefully, that covers the key questions.

George is asking perhaps that from Citi is asking a slightly more specific point is management comfortable with 12% gearing? Should we expect management to work towards an even lower gearing than the current level perhaps towards a pre-reorganization level? Thanks, George, for that question. As I mentioned, the group is very focused on the strength of its balance sheet. Exactly where we end up year-to-year is balance between the strong cash flow generating opportunities and capability that we have within the group and the opportunities that we encounter for deploying capital into new investments. So we don't have a hard and fast we must be on this number target for gearing. We do have a preference to run our balance sheet prudently. And in the past, that has taken us to single-digit gearing levels. And it's possible we will get there at some point in the future.

As I say, whether we do or don't get there will be driven by the quality of the investment opportunities that we have. We continue to believe in all 3 of the key focused markets, China, Indonesia and Vietnam, and we continue to look for opportunities in all 3 of those markets, and, of course, therefore, to an extent our gearing and exactly where we end up as a percentage will depend on the scale of the opportunities that we find there.

And question from Simon at Goldman Sachs. The lines are full today, well done, everybody. I appreciate your active participation. The group has acquired and disposed assets in recent months. Where else within the group, do you see opportunities to do so, both M&A and disposals? How does this tie with your target to bring down net gearing ratio to single digits over time? So Simon also picking up on the idea that there is a fixed target for us. Hopefully, I've dealt with that. Directionally, that is right, but there is no fixed target.

In terms of the opportunities for M&A and disposals, clearly, at the Jardine Matheson level as an investment holding company, we continuously review opportunities for those place -- for those -- both of those activities. On the M&A side, I would say the majority of the activity will come from within the businesses that currently sit within our portfolio. That doesn't necessarily mean that the businesses, the investments that they make will be exactly within the perimeter of what they do today. They may well extend to include adjacencies. And a great example of that has been down in Astra, both with the acquisitions of the gold and nickel mines and interests over the last few years to move beyond coal also with their investments in the health care space with investments in both Halodoc and Hermina and their investment in financial services in Bank Jasa Jakarta.

Most of that capital has been deployed in adjacencies. So businesses that sit quite close to businesses that they currently undertake, with probably only the health care business sitting outside their existing perimeter and the investments there being relatively smaller than the ones that have been made in adjacent businesses.

Other opportunities, as I say, probably we will follow the same pattern in other markets and looking for opportunities to invest in businesses that are adjacent to ones that we undertake with moves into areas and businesses that we don't currently operate likely being at a smaller scale, as we dip our toe in the water and undertake our usual more modest approach to businesses to learn at least in the early days.

In terms of disposals. Obviously, I won't comment on any of those specifically on any specific areas. The vast majority of our portfolio is performing very well, and we believe that we are good long-term owners of those businesses. Of course, if opportunities arise where we see ownership of that business being stronger and more core holding in the hands of an alternative buyer, where we can do that and it yields good add value to us in exiting the business, and there's also a good investment runway ahead for the business that's acquired, we will consider to look -- continue to look at those opportunities, but I think you'll understand I wouldn't make any specific comments on that at this point.

I'm going to continue taking questions from the online source. A question from Pravin [ph] at Morgan Stanley. Thanks, Praveen. What's my view of the stock on the price, the share price on the performance of Hongkong Land despite the sustained buyback program? Is it accretive for Jardine Matheson to increase its stake in undervalued subsidiaries like Hongkong Land? So if I go to the share price performance of Hongkong Land, it's pretty clear that there is a strong reticence amongst most global investors today to deploy new capital into China. It's very broadly reported in the press. And of course, between our business in IP here in Hong Kong, and our large development properties business in the Mainland, the overwhelming proportion of Hong Kong Land's earnings comes from China. And so I think principally, Hong Kong land is facing a sentiment issue around the Mainland.

As I mentioned in the overview of their performance, their performance is actually not in any way directly correlated with the performance of the broader property segment in the Mainland. Hong Kong Land's development properties business there is focused on the high-end residential market in 7 key Tier 1 and 2 cities. So very selectively deployed capital. And therefore, that broader sentiment, I think, is attaching to Hongkong Land perhaps in a slightly misguided way and we continue to believe that there is good value in that business.

On the Hong Kong side, as I mentioned, our performance here in Central, in the Hong Kong Land portfolio has outperformed Central, and Central continues to outperform the wider Hong Kong market. And so again, there is perhaps a sort of question in global investors' minds about investing in Hong Kong at this moment. I think it is fair to say that there is going to be, probably unlikely to be an overnight turnaround in Hong Kong IP market.

There some new office capacity comes into the market over the coming years. On the other hand, I see no overnight cliff edge moment for the portfolio performing much more poorly. And so seeing Hongkong Land performing its share price performing so badly, I can point to no clear economic drivers in the performance of Hong Kong Land that I think account for that.

On the other hand, I think that we have to recognize that investors make their decisions more broadly. And so it may take a little bit of time before the Hong Kong Land share price starts to reflect the still pretty resilient performance that it's put in all the way across the pandemic and now coming out beyond.

In terms of accretion for JM increasing its stake in undervalued subsidiaries, I can't possibly give investment advice and so I'll confine my comments to recognizing 2 things. One is we continue to look for opportunities to drive value in the portfolio and deepening within the existing portfolio will continue to be something that we look at. However, having deployed $7 billion of capital to driving a very substantial increase in earnings per share, that 45% increase in earnings per share since 2019 that I mentioned on one of the earlier slides, the balance of our attention at the moment at this point in time is focused on looking for new opportunities to bring businesses into the portfolio that can drive sustainable long-term growth for the future.

Clearly, we look at those based on earnings. We look at them based on value. We look at them based on risk. And of course, we look at them side by side with internal opportunities. But having deployed such a large amount of capital into the internal space over the last few years, that's our main reason for focusing elsewhere right now, exactly how circumstances unfold will be largely opportunity driven as we go forward into future years.

I hope that's not too evasive an answer. We do, of course, continue to believe that all of our businesses in the portfolio have great long-term -- mid- and long-term prospects for earnings growth based around their exposure to the growing prosperity of the growth markets of Asia.

And another question from Jayden. Can I provide an update on the HillHouse Capital partnership? Is there still appetite to invest in create new digital businesses and Jardine recent digital investments that have been made, OLS -- OLX and Bank Jasa Jakarta. And the relationship with Hillhouse is very good, very strong. We are continuing to learn from each other. Of course, this has been a time where many private equity firms around the world have judged that it's the right thing to slow down some of their deployments of capital. And of course, we listen to them and watch that with interest. There continue to be good opportunities for us to work together, both on the Mainland and in Southeast Asia and we've had tremendous collaboration from the Hillhouse team.

In looking at those, we will continue to do that. We continue to look for opportunities to invest in digital businesses. Most of that activity, as I mentioned, will relate to our existing portfolio of companies, and so some of it will come organically. Some of it, as you've highlighted, will come from new M&A activities that we'll continue to look to both ourselves and with learning from many of our partners.

I think I've run through most of the list there. So I'll give it one more chance for any other questions to come in. I probably won't leave it for too long. So if you have another question, please do send it through to us. Otherwise, I'm happy to wrap it up. And I look forward to seeing you next time. Thanks, everybody.