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Like Singtel? This Singapore Blue Chip Might Be a Better Long-Term Investment

Lawrence Nga

Singapore Telecommunications Limited (SGX: Z74) shares the Singapore telecom spotlight with M1 Ltd and StarHub Ltd.

The company’s share price has declined significantly over the last few years. Given its lower share price, investors might be attracted to the company now.

Clearly, Singtel is a good candidate for further research given the negative sentiments. Yet, it’s not the only company worth considering.

Let’s look at one company that might be an even better investment than Singtel, especially over the long run.

The contender

The company we’re talking about is Jardine Matheson Holdings Limited (SGX: J36), a conglomerate with interest in the web of Jardine companies that include Jardine Strategic Holdings Limited (SGX: J37), Jardine Cycle & Carriage Ltd (SGX: C07), Hongkong Land Holdings Limited (SGX: H78), Dairy Farm International Holdings Ltd (SGX: D01), and more.

There are two reasons Jardine Matheson might come out ahead in the long run.

Diversified business

For those new to the company, Jardine Matheson has a highly complex structure. It owns a number of subsidiaries and associates (indicated above), and in turn, it’s owned by one of its subsidiaries, Jardine Strategic.

I know — it’s confusing. More often than not, retail investors won’t even consider the company. But for those willing to do the research to find out, it’s actually a solid company with a widely diversified businesses. Here’s a quick overview.

Source: Jardine Matheson 2018 Annual Report

Jardine Matheson is widely diversified across five main industries. Such structure offers more stability (compared to Singtel’s focus mainly on the telecommunication industry) since Jardine Matheson’s overall performance is not dependent on one specific industry.

In short, Jardine Matheson is well-positioned to deliver sustainable income over the long term.

Solid track record

Another thing to like about Jardine Matheson is its solid track record of execution over the past decade. Let’s look at some numbers.

In the last decade, Jardine Matheson grew its revenue from US$22.4 billion in 2008 to US$42.5 billion in 2018. Similarly, its underlying net profit grew from US$0.8 billion to US$1.7 billion during that period. The former was up by 90%, while the latter grew 113%!

Comparatively, Singtel grew its revenue from S$14.9 billion FY08/09 to S$17.4 billion in FY18/19. On the other hand, its underlying net profit fell from S$3.4 billion to S$2.9 billion during the same period. The latter is mainly driven by the industry challenges Singtel has been facing lately across its various businesses.

The Foolish bottom line

In sum, investors who are interested in Singtel should also give Jardine Matheson a closer look given its diversified income and solid financial track record.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended Hongkong Land Holdings Limited and Dairy Farm International Holdings.

Motley Fool Singapore 2019