Singapore's worst stock fails to cash in from diversification play

Dairy Farm International fell 15% YTD in what marks the biggest STI decline.

187-year-old conglomerate Jardine Matheson Holdings, which used to be one of Singapore’s steadiest stocks, has found itself in troubled waters as two of its firms, Dairy Farm International Holdings and Jardine Cycle & Carriage, count themselves amongst the year’s biggest stock losers club, a report by Bloomberg revealed.

“Normally if you’re a holding company, you go into very diverse businesses and expect one to do well whilst another does worse,” said Nicolas Van Broekhoven, a Singapore-based analyst at researcher Smartkarma, who’s been following the Jardine companies for more than a decade. “Diversification isn’t working.”

Dairy Farm International is the Straits Times Index’s (STI) biggest decliner this year, falling 15%. The Jardine-owned operator of convenience stores, drug stores and supermarkets in February reported 2018 profit dropped 77% due to weakness in the food businesses and restructuring charges.

Cycle & Carriage, which has its own far-flung portfolio of southeast Asian business spanning car dealerships, palm oil processing and real estate, was down 6% since the start of January. Profit fell by more than half last year and the company’s main auto market, Indonesia, may grow more slowly in 2019, it said in February.

Read the full report here.