Jardine Cycle and Carriage under selling pressure

Most car owners in Singapore will be familiar with the name Jardine Cycle and Carriage (JC&C), a company involved in the retail, distribution, and provision of after-sales service for Mercedes-Benz, Mitsubishi, Kia and Citroen vehicles.

Mercedes Benz
Source: Bloomberg

JC&C also has its fingers in many other pies, such as financial services, IT, logistics and perhaps most notably a 50.1% stake in Astra International, an Indonesian conglomerate and the country’s largest car manufacturer.

The company’s stock has enjoyed a decent rally for most of the year, up over 16% year-to-date, but recently its share price performance has been less stellar. Since the release of its Q2 earnings results back in August, investors have been selling off their holdings and pulling down the stock price by over 10%, over the past two months.

Fundamentally, headwinds abound as a significant portion of its earnings is contributed by Astra. For Q2 2014, Astra accounted for more than 90% of the group’s $413 million underlying profit.

JC&C also warned that Astra has continued to face heightened competition in the car market and the effects of softer coal prices in its other business units.

Another significant risk is the likelihood of the rupiah weakening against the greenback, which will erode any earnings growth. With QE3 scheduled to end in October and Indonesia being one of the members of the ‘fragile five’, we could be looking at further downside for the rupiah.

JC&C has become a favourite of short sellers in recent weeks. 67% of IG clients this week have taken a short position on the stock.

Technically, the stock’s 50 DMA has just crossed under its 100DMA, suggesting we can expect further bearishness ahead. It has also broken below its lower Bollinger band, which might signal further downward acceleration.

The stock price looks to be starting a downtrend line and the next support level it is likely to test is at $39.29 – a 61.8% Fibonacci retracement and a previous resistance.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.