Yet Another Value Podcast - Unlocking Jardine Matheson's holdco value with Cayucos Capital's Dom St George

Episode Date: October 7, 2025

In this episode of Yet Another Value Podcast, host Andrew Walker speaks with Dom St. George from Cayucos Capital about Jardine Matheson, a complex, centuries-old conglomerate currently trading at a discount to its net asset value. Dom shares insights from over a decade of following the company, breaking down its historic roots, complicated structure, and the recent strategic overhaul under fifth-generation leadership. The conversation digs into the potential implications of new private equity hires, the value locked in Hong Kong Land and Mandarin Oriental, and whether simplification or empire-building lies ahead. Tune in for a discussion on the nuances of holdco investing and Asia’s corporate evolution.____________________________________________________________[00:00:00] Andrew introduces Jardine Matheson[00:02:45] Dom joins and outlines background[00:03:30] Jardine’s history in opium trade[00:06:00] Creation of Hong Kong background[00:07:30] Cross-holdings and structure issues[00:09:00] Recent disposals and simplification steps[00:10:24] Current NAV discount and relevance[00:11:33] Major business segments explained[00:13:00] Hong Kong Land valuation dynamics[00:14:06] Debating real estate cap rate fairness[00:16:36] Hiring private equity insiders[00:18:12] Risks of reinvestment vs. wind-down[00:20:46] Goal to raise AUM at Hong Kong Land[00:22:52] Market discounts family holdcos[00:24:56] Sell-mode vs. buy-mode question[00:26:41] Pattern of mistimed investments[00:27:05] Focus on five-year shareholder returns[00:29:00] Mandarin Oriental asset repositioning[00:30:55] Mandarin’s trophy brand potential[00:32:00] Selling HK hotel land to Alibaba[00:33:48] Lack of share buybacks questioned[00:34:52] 1947 Trust and executive incentives[00:36:50] Potential misalignment in trust structure[00:38:23] Why Jardine vs. other holdcos?[00:39:43] Astra International’s complexity[00:41:48] Subsidiaries: elevators, Pizza Hut, KFC[00:42:47] Final thoughts and episode wrap-upLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

You're about to listen to the yet another value podcast. Today's episode is on Jardine Matheson. Jardine Matheson is a Holtco trading at the sum of, trading at the sum of the parts discount. Our guest, Dom, from Cayucco's Capital has done, you know, he's got a 200-year history here. It's really interesting. It's an interesting discussion. And, you know, I think the thing in the back of my mind is 10 years ago when I first started out, I used to love Holder Co because it was all I did, you know, you take a company. Hey, $100 per share of like tangible value trading with, you know, 50 of cash and 50 of stocks and trading for 80. Awesome. And over the years, I've just, I mean, the history of holdcos over the past 10 years has been awful. And that's, you know, hold codes with shady

management teams have been terrible too. But also a lot of the greats who had hold codes. They have done really, really poorly. You know, I'm looking at you, IAC. I'm looking at you, Liberty. Several, several others. They've really underperformed. So I've gotten really skeptical of hold codes over the past in years. I think you'll hear that in the conversation. I think it makes her interesting divergence of style. So we're going to get there in one second, but, you know, obviously international stock. So full disclaimer, extra risk international stocks. See our disclaimer at the end of the podcast. But we're going to get to the podcast in one second. First, a word from our sponsors. This podcast is sponsored by AlphaSense. Look, AlphaSense has been a

long-time sponsor of the podcast. I am a super happy user of the OfficeSense products, everything ranging from their AI platform for investing, but particularly the expert calls that I use on a daily basis to look at companies and kind of see what industry insiders who are doing more than I'm doing, which is just being a dummy and reading the publicly traded filings and reading industry insiders are telling about how business is actually working on the inside and how they're viewing trends and everything inside it. So it was super huge fan of the platform. If you're interested, AlphaSense was kind enough, they just sponsored a free webinar with me and a former at MasterCard where we talk about the future of finance. In particular,

We're talking about stable coins and their effect on the overall economy, how they could impact remittances, how they could impact particularly payment networks because he's a former MasterCard. I think is a really fascinating interview. I think you're going to, whether you're a journalist or a specialist who focuses on that, I think you're going to learn a lot listening to it. And if you listen to it, I think you're going to, you know, see why I think expert call networks are kind of the most revolutionary product for investing, for generalists, for specialists,

for everything to come along in the past. 10 to 15 years. So if you're interested, I'll include a link in the show notes to go check out that webinar. But thank you to Alpha Sense for sponsoring this podcast. And now on to the podcast. All right, hello, welcome to the yet another value podcast. I'm your host, Andrew Walker. With me today, I'm happy to have on for the first time, Dom St. George from Kayoko's Capital. Dom, how's it going? Good, thanks. It's a real pleasure to be in. All right. I'm super excited. Before we start talking, just remind everyone on this podcast, nothing on this podcast is investing advice. Always true, but we're talking about.

talking about an international stock today. So that carries extra risk. Consider that. See the full disclaimer at the end of the podcast. Dumb, the reason you're hopping on, you did a great write-up on your substack. I'll include a link in the show notes for anyone who wants to go read the full thing. But it's on Jardine Matheson. The ticker there is JM, but it does trade international. So people have to kind of go find that. You've been covering, I thought what was so cool is two-thirds of the way through your write-up. You mentioned, hey, I've been following this stock since 2012, I think. So you've been following it for a long time. But I will just pause there and ask, what is Jardine Matheson, and why are they so interesting?

Yeah, thank you. So I love to delve into the ancient history of companies, and so I can't get going without talking about the founding story here because it's just so fascinating. So most people will be aware of the East India Company, which in the 19th century had a monopoly on trade with India, the British East India Company. And few of them maybe will be aware that one of their main exports out of India was opium. But the East India company, I think if you've ever watched a TV show with like a little historical fiction, I think they make it pretty clear what was coming out of the East India Company, to be honest with you. Okay, okay. So maybe more well known than I thought.

but so they didn't want to actually send their people into China directly. They didn't want to ruffle too many feathers. So they left the actual import of opium into China to enterprising traders such as Jardine and Matheson. And William Jardine in particular made so much money from this trade, as you can imagine, that he used that wealth and also his seat in the House of Lords, which is similar to the Senate in the UK to lobby for the end of the of the monopoly that the East India Company had. And eventually he was successful. And so, you know, the East India company tried to kind of limit the flow of opium, whereas when that monopoly ended,

you had a complete free-for-all of opium coming into China. and that's what forced or made China decide to ban opium outright. And that was so, you know, deleterious to the British Empire that they went to war with China over that ban. And it was the subsequent treaty after that war that led to the creation of Hong Kong as a British colony. So basically the history of this kind of, led in effect to the creation of Hong Kong as a British economy.

So let's fast forward a couple of centuries. And Johnny Masson really, for context, I describe it as a perennial value stock. And anyone with a value inclination in Asia probably sort of groaned when, you know, you know, they saw somebody pitching this stock because it's been cheap forever. And the reason for that is that the group essentially made a levered property bet in the mid-80s, which turned out to be very poorly time. It came months before the British and the Chinese announced the eventual handover of Hong Kong back to China.

And that led to, you know, a property slump. and the company, you know, started to be circled by would-be would-be suitors. And so in order to avoid takeover, the group basically instituted a very complex cross-holding structure where they had two holding entities, each with controlling shareholding in the other, which essentially made it impervious to outside influence. And so anyone who's looked at this over the years, as you mentioned, I first looked at it in 2012. It's always traded at a large discount to NAV or some of the parts, but ultimately, who cares? But there have been some quite substantial changes in recent years.

So it seems that Ben Kesek, who's the fifth generation of the family, has sort of consolidated control over the group. And he's done a number of very interesting things. The first thing is to unwind the crossholding structure. So there's one clear holding company, Jardie Matheson. Secondly, there have been a number of disposals that the group has met across the group, which I add up to around $4 billion, which is pretty substantial relative to what is today an $18 billion market cap. And so the group has been very, the third thing is that the group has been very insular historically. they had a graduate scheme which trained people up

and basically all of the senior executives were lifers. And the thing that really caught my attention was that they announced earlier this year that they were bringing in a new CEO, a gentleman named Lincoln Pan, who was and is the co-head of private equity at PAG Group, which is one of the largest private equity groups in Asia. And when I started to dig some more, I realized it wasn't just him.

They have a number of senior sort of big swingers from private equity on the board. So there's a gentleman from KKR and a lady from Carlisle. If you look at who's now heading up the China business, it's a guy called Steve Sun, who was co-head of China for TPG. and his number two was a senior investment banker for, I think, the head of Asia for Bank of America, Merrill Lynch. And just to reiterate, so Lincoln Pan actually starts on the 1st of December

in a couple of months' time. So despite the $4 billion of disposals they've already done, it's quite clear there's a lot more to come. And they've sort of given us a roadmap for some of that, which I can get more into. That's great. Let's just pause there. Okay, so you've got a company with literally centuries of history, right?

And what you're saying is, hey, fifth generation kind of comes in. They've been to it for a while, but they've really just cemented their control, hired a bunch of outsiders with deal experience who are coming in, and you think the path from here is great. So let's just start. I normally ask why is this an opportunity, but I think you kind of laid down. I think the place to start would be, hey, as you and I are speaking here today, you know, frame the upside for me. The stock is trading, if I just pull this up,

the stock is trading at $63, I guess that's HKD, but it's trading for 63-ish per share. What does NAV look like here? What does value look like here? Yeah, so again, so I've done some of the parts. Almost all of the entities of the group are publicly listed, So it's pretty easy to do. And so I get to basically a 16% discount to any NAV, which is not very exciting in and of itself.

It's more all of the potential corporate activity that could happen. So we could go through the different pieces of the NAB. I thought one of the really interesting pieces is they've got Hong Kong land and there's the market price. And then they say, hey, if you look, these are trophy assets. We think the real value of them is like 2x the market price. but that was true. We can talk about all those pieces. But as you said, one of the questions I'm going to come back to is, hey, 16% discounts an app. That's not that interesting in Holco's. What is the go forward path that makes you so excited? You know, what is the go forward path?

Because if you told me 16% discount, they're liquidating tomorrow. I'd say, oh, that's pretty cool. 16% discount. Like, what are they going to do to grow nav or that we're going to kind of, you know, as I like to say, what are they going to do that we're going to capture a risk-adjusted alpha opportunity by buying the stock at a 16% discounts and a half? Yeah, so, I mean, I think it would be useful to start getting into the businesses. And as you said, so very roughly, you got one third Hong Kong land, one third Astro International, which is the largest business in Indonesia by revenue, very broad conglomerate, and then one third everything else.

And so starting with Hong Kong land, it's about a $13.5 billion market cap today, and they own 53% of it. but they would tell you the net value of their assets is actually $35 billion. And so, you know, what's the differential? I mean, one, they're a little bit aggressive in terms of the cap rates they use. So the biggest portion of it, about two-thirds of it are Hong Kong office. Hong Kong office is about half of Hong Kong land. And then a little bit more comes from Hong Kong malls.

And they use a three-ish percent cap rate. on those assets. So you could say, well, that's a little bit aggressive, but one thing that, one data point that is pretty quite interesting is that they actually sold one of their space. They sold nine floors of one of their prime Hong Kong towers earlier this year to the Hong Kong Stock Exchange at roughly, you know, a similar cap rate.

And I also think that's quite symbolic because, you know, As I say, it's a real, it's basically the jewel in the crown. It's the asset that they almost went bust buying in the 80s. So it kind of demonstrates to me that they're willing to sell anything and everything. And so, again, $13.5 billion market cap, they've announced that they want to do up to $10 billion, up to $10 billion of capital return by 2035. Now, that's quite a long lead time, obviously, but it's because most of it comes. from basically winding down the development assets that they have.

You know, they're building office towers and malls, mostly in China. So when we talk about the 16% discount to NAB that Jardee Mathins the trades for, right? We're talking about on Hong Kong land, which is about 33% of their data, you're using the market price to get there. They're saying, hey, we think this is worth double, more than double. the market price. Who do you think is right? Do you think they're right or do you think the market's right here? Well, I mean, I think it's somewhere in the middle.

I don't want to say that the market is wrong. But I think the reason, well, I think the reason it's interesting is that they are actually making steps to realize that NAV at close to their cap rate. Because what's interest here is if I just do the math in my head, right? if they've got $33-ish of their $100 for sure value, if I'm just kind of doing that as a nav. At market price, if you say it's,

they think it's that 33's worth 66, you think it's somewhere in the middle, so it's worth 50. That takes your nav discount from 17% to about 33% just on that alone. I guess my pushback would be like, look, I've done a lot of these hold co-investing. When I first started, like, all I was do is hold co-coes to my detriment, right? I just love these things.

And I was like, oh, these smart families that control, over time, I've gotten really disillusioned with them. And one of the reasons I gotten disillusioned with them is every time I had a control hold code that said, hey, we've got this crown jewel, we think it's worth way more than anyone again. Traditionally, it was actually really bad. And it was bad in one of two reasons. A, they way overvalued it.

And because the market was trading net 33 and they thought it was worth 66, they plod more money in it. And then when the market turned out to be right, they had wasted all the money. So I guess when I look at them saying, hey, crown jewel worth these low cap rates, I get really worried that it's got the traditional disillusionment of hold codes, if that makes sense. Yeah, I mean, I think you're totally right. And actually, you know, I'm always very hesitant to describe myself as a value investor. And the reason for that is similarly, I've discovered that a lot of the mechanisms to recognize value that exist in the U.S.,

Let's, you know, activists, for example, private equity, directors with statutory responsibilities to minorities, even bankruptcy, you know, transferring assets from bad owners to good. A lot of these mechanisms, they just don't exist or they exist to a lesser extent in emerging markets or even internationally. So you do have to be very skeptical. And so, you know, alignment with the key decision makers is very important. But I think there's just so much evidence here that they are shifting the portfolio from. Great. Let's go to that then, right? I think the crux of your thesis is, hey, you have this company where the fifth generation, even though they've been there for a while, they really just cemented control, right? the fourth generation, as you say in your write-up, I think you've got signs progresses by funerals, and you say that's how family hold codes works here, right? The fifth generation

really just took full control because the fourth generation died out. And you say, hey, they're bringing in these heavy hitters to be the net CEOs, right? They're bringing the private equity firm. And I get that that is exciting. You say, hey, they're only bringing in the private equity heavy hitters for one reason. The private equity heavy hitters are going to be on the other side of investment bankers and other private equity firms and deals. And I think, you alludes that being asset sales and capital returns is kind of where your mind. That's not where my mind goes. Like, this is a fifth generation family or a company.

I don't doubt they're going to sell something. But my, you know, what you're kind of suggesting is a windup. And when I see them hiring all the, you know, a former B of A head of private equity, what I see is, hey, we're going to go do a lot of investing. And yes, maybe we sell the old stuff, but we're going to be full speed ahead, building out a family hold code. This is going to be a conglomerate. And I'm worried that's the direction they go because if that's the direction, 16% discounts enough.

Now, maybe they hit home run after home run. I don't know. But I think the base rate is when you're doing a family hold co-investing, the base rate is that the investments are done with a quote-unquote long-term time horizon. And that's quote-unquote long-term time horizon because they all underperforming. You say, hey, one year is going to be our year. So I threw a lot out there. But what do you kind of think about just like that go forward? Because I think that's where you think the catalyst is.

Yeah, I mean, to be clear, I don't think this is going to be wound up and the whole thing to be taken private. I just, I'm arguing for simplification, and there's so much low-hanging fruit to achieve that simplification. And I think you are right. So let's get, if we get into the people who they've hired to run Hong Kong land. So again, outsiders, the CEO who's hired also a CIO, chief investment officer, both of them came from Maple Tree, which is the real estate subsidiary of Tamarsec, the Singapore Sovereign Wealth Fund, one of the biggest investors in Asia.

And interestingly, they both before that were at Goldman Sachs. And at Goldman, they did a lot of the REIT IPOs in Asia. And if you look at their presentation, they are saying we're going to go from about $40 billion of assets under management to $100 billion, in part by managing third-party capital. become, they're going to become, in part, more of an asset manager as opposed to, you know, just owning 100% of everything and, you know, trying to generate returns that way. So it's become, the plan long term, it's become more of a fee business and that, you know,

the people they put in charge are indicative of that. I mean, that is certainly interesting, but it's a lot of money to raise and you have to hire a whole team and build out, like, let me ask two questions. Base rate. Have you seen Family Holdco successfully build asset management businesses like they're kind of suggesting here? That's a good question. I mean, I have seen family companies raise third party minority

stakes in group companies. Generally for, generally for, XOR is going to buy the economist, they buy 80% and they bring in co-invest for 20% right, but that's more co-invest. Like they're talking about going from 40 to 100 billion and if they could raise

60, let's just say it's 60 billion of outside capital at 1 in 10. I mean, you would put a feast, you would put a multiple on that. That would be worth quite a bit of money. That would cover a lot of overhead here. So I'm interested, you know, I can't think of any

examples of one having done that. It doesn't mean it can't done. But if they could, and it seems like that that is interesting, I just can't think of one that's done that. Yeah. I mean, I think it's the direction of travel. I mean, whether they're going to get to $100 billion, I mean, that's quite an aspirational thing. But I do think if the more they can do to demonstrate that the 3% number, you know, 3% category they're using is actually a number that people are willing to pay. Third parties are willing to pay. I think that's all, you know, that's all positive. And again, you know, the $10 billion they want to return from Hong Kong land by 2035 is a slow pace.

But, you know, just this month they announced a $660 million sale of a Singapore-Malaysia-focused residential developer. So, you know, it's a business, you know, I didn't really know even existed that they sort of plucked out of their portfolio and put a $660 million number on it. Not bad when you don't even. know there's something in there and it returned. Let me ask this question a different way. This is a hold co, fifth generation. He's hiring a bunch of private equity people. You know, forget what I said about third party. You've done a lot of holdcos. I've looked at a lot of holdcos. Can you think of family controlled is hold coes that have transitioned to kind of the professional group? You know, they're hiring a private equity firm. They're hiring firm bankers.

Can you think of one that has done that and kind of done well? Well, I mean, you mentioned X-R. I think that would definitely be up there as one of the best. You know, it's funny you mention X-R because I'll just show you just next. You talk about the 16% discounted at that. X-R has done quite well in terms of NAV and compounding. I looked at X-R when I was prepping for this. X-R's NAV, they paying it as $180 per share, and they're trading at $80.80 per share.

So I think the results have been good. I haven't followed them as closely as you used to, but I would just say, like, they're traded up 40% of NAV. It looks like if that's right, like if that's a good case here, you know, careful what you wish for, I guess. Yeah, I mean, the market in general does not like conglomerates. I think that's absolutely clear. I mean, there's a family conglomerate in South America that.

have made phenomenal decisions long term. Is this a process? No, this is, it's called Kenyenko. It's quite a small free float, but it's a Chile-based group, and they've made some fantastic decisions. But again, you're right, the discount to NAV is,

I haven't looked at it very recently, but it's kind of 50, 60%. So, yeah, the market doesn't give businesses credit. But, you know, every dollar that's returned to shareholders, you know, I value that dollar in my pocket at the dollar. So if a lot of it comes back to us, then, you know, that that can lead to good returns. I actually think what you, what you just said is what I was kind of trying to strive that as my risk factor, right? Like,

to me, a family hold co, a hold co and discount is great if they're going to return the capital, right? Like a liquidation wind down. I think what I'm worried about here is, okay, Hong Kong land, They sell and they realize it's treating at a 6% cap. They think it's worth three. They realize it at a four and a half, four, whatever it is. What I'm worried about is because they hired all these P.E. guys, the answer is not going to be take that money from Hong Kong land and return it to Jardy Matheson shareholders. Now, Hong Kong land might return it, but once it gets to the Jardy Mathis lovers, I think

you've got these P.E. guys who are going to say, all right, it's time to go buy something, right? And the history of that is poor. And I worry, again, I haven't followed Exort closely in a while, but I kind of worry you go get the Exor treatment or you get the South American treatment. You're talking about where, hey, they do great sales, they go plowed into new businesses, and the stock just lags. And it just keeps trading under NAB. And you have just kind of a preennial underperformer, I guess, would be where I'm trying to drive my worry to. Yeah, I mean, it's certainly possible. And, you know, to be clear, the recent history of the investments that this group was made over the past decade have been very poor.

And I guess one of the things that's interesting to me is a big part of those, that $4 billion of disposals they've done in the past four years, that's unwinding past acquisition. So it seems very much like they're in cell mode rather than buy mode. But it is possible that once this sort of private equity team is assembled, you know, they're clearing the decks in advance of that. and they will go out and do more M&A. I mean, I think they know that the market will not look fondly on M&A, but you're right, they may not especially care. I was, are you familiar with Liberty Media at all? Somewhat, yeah.

I was reading John Malone's book. We just did our book club on it. And the thing I was lacking at is every decade, AT&T can be trusted to make a terrible acquisition and then unwind it. But, you know, when you're saying Jordan Maths, one of the reasons they get into the complex whole Coast structure is in the 80s, they buy real estate at like the height of the market, right? And it takes them almost 40 years to unwind that evil. And then in 2020, as you say in your write-up, one of the

reasons they get in trouble is in early 2020, they buy four billion plus of Chinese real estate and then COVID hits. And the real estate is probably what? The ink is dry on the parchment and the real estate's probably down 19% by the time it's dry. And it just, it kind of reminds me of AT&T, right? And now we're saying, hey, they've got these new guys. guys, these outsiders, and I'm like, yeah, they're going to sell a lot of that stuff. And I would not be surprised at five years from now, Dom's on. And we're saying, hey, sold a lot of stuff. And they moved into AI at the absolute top of the market.

And it was bad or something, you know? Yeah. I mean, I would say that I think the, as you say, very poorly timed acquisition of a big person in land in Shanghai in 2020, I think that could well have been the sort of straw that broke the camel's back and convinced them, okay, we've not done. Our traffic was not very good over the last 10 years. It's bringing outsiders really badly changed the strategy. That's the optimistic take.

One of the things that struck me reading their annual report is, annual reports and manual reports, a manual report, all this, this huge focus on our goal, our North Star is five-year, what's the exact what they say. It's five-year, superior, is the quote. Superior five-year total shareholder returns. And it is kind of funny because when you read the annual report, their five-year return is is negative and, you know, indexes, they don't count to an index, but indexes are not negative over the past five years. But I just wanted to ask you about that. Like, when they talk about that,

and when they talk, we can talk shareholders and stuff in a second, when they talk about, like, like, how do you think about when they're saying we want to drive superior five-year returns, how do you think they're thinking about it? Well, I think it means an asset like strategy. So, you know, talked a bit about Hong Kong land and what they want to do. One of the smallest, but you know, most high-profile parts of the group is they own the Mandarin Oriental chain of hotels. So there, again, they've talked about moving towards a management model rather than, you know, owning the real estate and owning and operating. And they've already sold a couple of hotels. They sold Washington and Paris, one of which they retain the management contract.

So, you know, that's sort of indicative of what they want to do. So, yeah, as I say, you know, an asset-like model and then also simplification. So in the third bucket, you know, the other bucket, the biggest chunk of that is a retail group called Dairy Farm International. So historically, that was Hong Kong as well as Singapore, Malaysia. Asia, they had grocery stores in Indonesia, the Philippines, and all of those have gone now. They've all been sold. So it's, again, much more simple group. It's basically just Hong Kong.

They run the IKEA franchise in a few countries. And they're the 7-Eleven operator across a few jurisdictions. So it's radically simpler than it was, has very little debt now. And so, you know, that both those entities, so dairy farmers owned 78% by the group and Mandarin Oriental, which they've been buying, they own 88% on. So very easily they could privatize their assets. I did not realize Mandarin Oriental was publicly traded. And now obviously they have an 88% so publicly traded is kind of a loose thing. But I do think that's interesting.

Like that is a place where you could see, I could see a family Holdco with a long-term vision really creating something. because for those who don't know, Mandarin Oriental is like, I'm not staying at 1,500 night hotels, but I believe it's about the highest end hotel chain out there. And they're building it 40 units. Like, you could imagine how A, every new unit they build. And obviously there's a cap on that, right? They're not going to build. I love Lafayette, Louisiana, but they're not going to build a Mandarin Oriental in Lafayette, Louisiana.

There's a cap on just how money they can have. But every new trophy Mandarin that you build in Trophy City kind of adds to the network. And you have to imagine if and when they ever put that up for sale, every large hotel group is going to, that's going to be a, you know, trophy property that a Marriott would bid out the nose for because they want access to that customer. It's a hugely synergistic piece of their business. The CEO probably wants to stay at the Mandarin instead of the Westin when he's traveling around if you're being completely honest with everyone. So I think that's a really interesting example of a place where a family hold co can, uh, maybe, take a longer-term view and create value. Anything you want to say there or add on to that? Yeah, I mean, luxury hotels are one of those things that you have to take off the list

if you're a mega billionaire. You know, you want to own a sports franchise, you know, massive debt, and you want to own a chain of hotels or, you know, one flagship hotel in New York or something. And so it's funny you say that. They really do. And I get why you'd want to own a sports scene. I get why you'd want to own a jet. I don't know why you'd want to own the hotel. Why do you want to own a luxury hotel? What's the point? Well, it's the VIP treatment that you get. There's no better directorship than being on the board of a high cost airline because you get the VIP treatment. So on the subject of hotels, so it's quite interesting. You know, you own, you know, you own, sorry, let's say you own a commercial

tower, office tower. You get to hold. that as investment property. And so you get to basically mark to market every year. You get to, you know, use a cap rate and market to market every year. Whereas hotels, you know, it's a very similar asset, but it's the way it's held, it's a depreciating asset. And so it's kind of disadvantageous to run an office, a building as a hotel as opposed to an office. And so, you know, Mandarin Oriental owns a lot of its land and property assets. And actually, so they had an old hotel in Hong Kong, and they decided to redevelop that as an office town. And they've just announced this week that they're in talk to sell about half of the office space to Alibaba for $900 million, which compares against a $2.6 billion market cap for Mandri and Oriental.

So very material. on. So there's a lot of, there's a lot of, you know, value in that, in those property assets. It's one of those things. I mean, it's not unheard of for hotel chains to trade well below their real estate value, but when do you realize it and do you really trust it? Let me ask, so just on the five-year show of a return, you know, again, I completely understand the family whole code and everything, but to me, they trade in a nav discount and they clearly believe their nav is way, way higher than the share price. You know, I look at the sake, why aren't they buying back stock?

The stock buyback is token at best and basically zero, if we're being honest with each other. They do pay the progressive dividend and everything, but if they're saying, hey, we want to be a, we want to deliver superior five-year returns, there's nothing they could do that would deliver that better than buying back stock under just market NAB, forget their NAB. Why do you think they aren't doing that? Because to me, it's just like, again, we're dancing around the elephant in the room. I'm worried about Empire Building.

It seems like a red flag here. Yeah, it's a very good question. I mean, one obvious answer could be, as I say, the CEO hasn't actually sat at his desk yet. He joins first in December. So that presumably is something that's on the to-do list to be a bit more aggressive about buying back the stock. I mean, as I mentioned with Andrew and Oriental,

or they have been selectively increasing their stakes in some of the main entities. The biggest entity by market cap is kind of, it's an intermediate holding company called Jardine Cycle and Carriage. And that holds the stake in Ashtra International, which is the Indonesian conglomerate. And they own 85% of that, which I believe that they've increased in recent years.

So one of the more obvious, things that I think they are likely to do in the next couple of years is to buy out the 15% minority in cycling carriage, which, again, simplifies the group, allows more of the dividends to accrue up to the top. There's some interesting language in the annual report about border remuneration, incentive of alignment and everything. They've got the 1947 trust. Can you explain how the 1947 trust works to me?

No. So the 1947 trust is one of the main family vehicles, but there are two family vehicles which own just over 25% of the company. But beyond that, I don't really know how decisions are made within the family and exactly how the trust works. No, that's completely okay. There's this weird thing where, and again, it made my head spin when I was reading, the 1947 trust, which again, owns, I think it's 8% of the company, maybe 10, I can't remember the

exact number, is controlled by the company and pays out dividends. And they use that dividend stream to, in part, pay the directors who are then required to use some of that dividend stream money to buy shares on the open market. But the executive chairman, the family, the fifth generation family member we were talking about, is the one who controls how much of the 1947 dividend goes to the directors, and I've just never seen anything like it before. And it strikes me as really weird because you could say, hey, huge alignment, right? They're getting dividends that they're forced to plow back into the stock. Huge alignment. On the other hand, you could say huge misalignment. A, they want to keep paying a dividend because that's how they're getting paid

from the 947 trust. And B, because the executive chairman decides how much of the dividends go to the directors, they need to stay on his good side. no matter what, right? So if he's walking around wearing no clothes, they're going to say, hey, great suit, sir, because they kind of serve and get the dividends at his pleasure. Like, that was my understanding. I could have been wrong.

It was very confusing. I've never seen anything like it before, but that's kind of why I was asking about it. Yeah. I mean, it's kind of how you might run a private family entity, right? You would, you, you, it's as the owner of the business, as the family owner, discretion to decide how much equity somebody gets, how much they get paid.

It's kind of like a, you know, a private profit share, I would see it as. I think you're exactly right. It's just the way it was structured was a little strange to me I've never seen before. Let me ask one less thing. And then we kind of wrap it up. Again, holdkins are difficult to talk about because like, hey, Nav is 100. It trades at 80. Should it trade at 90?

Is now that actually 100 or 150? But it's tough to like really have been. He says, why Jardine Matheson, right? You lit up 15% discount to market NAB. You probably think NAB is, I'm just going to put words in your mouth, 25% understated so that 16% is closer to 35% or 40%. But, you know, I mentioned XOR. I think XOR, based on their number of strings at half or under half of math.

IAC, $35 per share of stock price, $40 per share in cash plus MGM stock, plus other stuff that's probably worth another $10 per share. So that's trading net, if I'm doing that math in my head right, 70% of NAV. Pershing Square, there's a popular one, 27.5% discount to NAV. Obviously, there's fee issues, control issues, everything. But that's what comes with hold codes. I just listed three. We could probably find 20 more.

But why Jardee Matheson over any of these other kind of discounted hold codes that I just walked through? Well, I think because of the, you know, the delta, the change. I mean, you know, this business. this industry, the job is filtering. And so anyone who's looked at Johnny Mason over the past 30 years will have concluded, as I did, a decade ago, you know, horrible government governance, you know, past.

And it takes a long time for people to really believe when something has fundamentally changed. And I, you know, I see lots of evidence that that change is happening, firstly. And secondly, there's just so much. low-hanging fruit. I mean, we haven't even got into Astra International, which again

is the Indonesian conglomerate. I mean, I was looking at it, and I believe I found 10 publicly listed subsidiaries of Astra, which itself is a subsidiary of a subsidiary. So there's a lot you can do to

restructure and simplify and realize value. I mean, go with that. Anything in particular Obviously, I was just focused mainly on the hold code, the nav, but anything in particular you want to say about that one that you think is particularly interesting? Like, they've got, I think, if I remember correctly, that's a third of nav. Is there a reason to leave that nav is understated or there's going to be some inflection

point there or anything? Well, they've really said very little about Astra International. And I think one of the reasons for that is that, again, it's the largest business in Indonesia by revenue and so in some ways it's almost like a quasi state company and so they have to be a little sensitive about the changes they make i understand that bcg is in there you know doing some sort of strategic review and i just find it hard to believe that with all that's going on in all the other group companies they will you know there'll be nothing done at astro international As it says, it's incredibly complex with 10 discos within the business.

The main entity of Astra is the largest dealer, manufacturing dealer of cars in Indonesia. So, well over half, they're the exclusive distributor of Toyota. So well over half cars sold in Indonesia, which is a $250 million, sorry, 250 million population country. and I think 80% of all, you know, two-wheel motorbikes are sold and financed by this entity, Astra. So it's a massive business and, again, is a sprawling conglomerate. So there's a lot that you can potentially do. And Indonesia is a very unpopular place at the moment with equity investors. I'm just laughing because with 10 listed subs and the complexity of that,

we can do another, a follow podcast on the HoltC at Astro International. It reminds me of a little bit of Voie in France where you just get hold co discounts on hold co discounts and one day then one. Cool. Well, look, I think they've gone through all my questions. I just want to, is there any asset that we covered, obviously we go deeper into them, but I think this more hold could, but any Astro asset that we haven't talked about or that we kind of blames over that you think is just worth highlighting or anything else that

I kind of should be asking about Jard. Matheson that I haven't hit on? Not really. I mean, yeah, you can get into the weeds and there are so many, you can find more and more businesses. So, for example, they own, in Asia, Schindler, which is the, you know, giant elevator manufacturer, Jardie Matheson is their JV partner. They run a thousand Pizza Hut and KFC locations, mostly in, you know, across Asia. So there's just, once you pull back the layers, there's so many businesses. And for me, given, you know, the evidence of change, that all of that creates optionality.

Is KFC still like kind of a dominant brand over in Asia? It's generally pretty, yeah, very successful. Okay, I just remember when I was, you know, 10 years ago when I was up and coming, everybody talked about KFC over in China. It's nothing like KFC over here. Like it is the place. It is the hot, you know, it's upscale. It's where everybody wants to eat.

I wasn't sure if that had changed the whole. past and years. Yeah, I think it still continues to do to do very well. Cool. Okay, well, this is a great. Look, Dom has a great write-up on his substack. I'll include a link in the show notes if you want to go there

and it includes, you know, as Dom mentioned at that, it's top. 200 years of history of Jardine Matheson, he's been following it for 12 years, had a sell on it. You know, the stock, again, I laugh at their end your report because we wouldn't deliver superior five-year returns and 10-year return, negative. since you, but it may, you know, did it work for them? No, but it might just work for us now.

But Dom's in Georgia, I'm Kai Yucca. This has been great. Thanks so much and looking forward to chatting soon. Thanks for that, Andrew. A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.