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Vietnam's Massive Economic Boom Saves Jardine Cycle & Carriage's FY2025 · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:08
  Imagine growing your overall profit by a microscopic 1% over 12 months, just 1%. Right.
• 0:15
  But somehow your shareholders walk away with a massive 34% return in that exact same year.
• 0:22
  Yeah, it sounds a bit like Wall Street voodoo. It really does.
• 0:25
  But welcome to today's custom-tailored deep dive. we are tearing open the FY
• 0:32
  2025 financial results of Jardine Cycle and Carriage. Most people just know them as JCNC.
• 0:37
  Exactly, JCNC. And our mission today is to figure out exactly how they pulled off this magic trick.
• 0:44
  And we're doing this strictly through an investor's lens. So if you're listening
• 0:47
  and you're looking at your portfolio, this one is for you.
• 0:49
  Yeah, absolutely. And just to be clear, we aren't just reading you a spreadsheet today.
• 0:53
  Right. We're pulling from two official documents here. First,
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  there's the FY 2025 results presentation that came out in early March of 2026.
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  And then we've got the full 2025 financial statements and dividend announcement
• 1:06
  from late February 2026.
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  So we're really going to decode the mechanics behind the numbers.
• 1:13
  We want to understand not just what happened, but why it actually matters for you as an investor.
• 1:18
  Yeah. And you know, when I first looked at the overview of this company,
• 1:21
  the best way I could wrap my head around a conglomerate like JCNC is,
• 1:25
  well, it's like owning a massive multi-engine cargo ship. I like that. A cargo ship. Right.
• 1:32
  Because if one engine starts sputtering, you know, because of rough seas or
• 1:35
  whatever, you're really relying on the other engines to pick up the slack. Exactly.
• 1:40
  So the ship still arrives on time. That is a really helpful visualization to
• 1:44
  start with, because when you look at their 2025 top line profit,
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  it looks almost entirely static, like nothing happened. Yeah, totally flat.
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  But down in the engine room, you see this highly active management team making
• 1:56
  these just massive underlying strategic shifts. So let's start with that top
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  line scorecard just to see if the ship actually reached its destination.
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  I'm looking at the summary right now.
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  And the underlying profit landed at 1.11 billion U.S.
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  Dollars, which, like we said, is up just 1% from 2024.
• 2:14
  Just a tiny bump. Right. But then you look at the shareholder reaction and they
• 2:18
  are thrilled. Can you walk us through the actual return numbers? I gladly do that.
• 2:22
  So while the profit was flat, the total dividends increased to 113 U.S.
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  Cents per share. Yeah, it's significant.
• 2:29
  That breaks down into an interim dividend of $0.28 and a final proposed dividend of $0.85. Okay.
• 2:35
  And their earnings per share, or EPS, that landed at $281 U.S. cents. Mm-hmm.
• 2:41
  But the stat that really defines their year, I mean, the one that everyone is
• 2:44
  looking at, is their one-year TSR, which hit that massive 34.2%. That is huge. It is.
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  And even zooming out, if you look
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  at the longer trend, their five-year TSR sits at a very healthy 17.5%.
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  Oh. And on top of all that financial stuff, they achieved their highest ever
• 3:00
  ranking on the Singapore Governance and Transparency Index.
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  They landed at number four. Number four. That's impressive. But just to pause
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  you there for a quick second, let's just make sure everyone listening is on the exact same page.
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  When we say TSR, we are talking about total shareholder return, correct?
• 3:16
  Correct. Yes. Meaning, you know, you aren't just looking at the stock price going up on a chart.
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  You're combining the share price appreciation with those actual cash dividends
• 3:24
  they paid out. Precisely.
• 3:26
  TSR is the true bottom line for an investor.
• 3:29
  I mean, it is the actual wealth generated for holding the stock in your account.
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  Okay. So this brings me back to my opening question.
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  How in the world does a company grow its raw profit by a tiny 1% but deliver
• 3:43
  a 34.2% return to its shareholders?
• 3:46
  It just it feels like a disconnect. I know it does. But what's fascinating here
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  is that the market isn't just rewarding raw top line growth right now. Right.
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  In a really complex global economy, the market heavily rewards efficiency.
• 4:00
  It rewards risk reduction and really smart capital allocation.
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  So it's about how they handle the money they already have.
• 4:07
  Exactly. You have to look at the balance sheet, not just the income statement.
• 4:11
  Specifically, you need to look at what they did with their corporate debt.
• 4:13
  Okay. Lay it on me. How much did they cut?
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  Well, JCNC slashed its corporate net debt from 816 million U.S.
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  Dollars down to 577 million U.S. dollars. Wait, what? Yeah. In a single year?
• 4:27
  In just one year. Wow. Okay, wait. Wait.
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  Paying off a chunk of debt is great, obviously. It's, you know,
• 4:33
  financially responsible.
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  But does paying down debt really justify the stock performance jumping 34 percent?
• 4:39
  It does. When you look at the mechanics of why they did it. OK, how so?
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  By aggressively paying down that debt, they vastly improve their financial flexibility
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  and they immediately reduce their financing costs.
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  I mean, every dollar they don't spend on interest to a bank is a dollar that
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  can go into that 113 cent dividend. Ah, OK.
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  That makes sense. Right. When a company proves it can maintain a billion dollar
• 5:02
  profit while simultaneously cleaning up its balance sheet, especially in a high
• 5:06
  interest environment, institutional investors take notice. They love that stuff.
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  They really do. That 34 percent return is basically the market saying we completely
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  trust your capital management.
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  So if that massive debt reduction was the magic trick that saved their TSR.
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  It kind of begs the question, right?
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  What forced them into such a defensive posture in the first place?
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  Ah, yes. Because they clearly saw some rough waters ahead. So let's look at
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  the engine that actually stalled on them. You're talking about Indonesia. Yes, exactly.
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  Indonesia is the absolute anchor of this portfolio. This is their biggest market by far.
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  But in 2025, the profit contribution from Indonesia dropped by 8%,
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  falling to 945 million U.S. dollars.
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  Yeah, I have the breakdown right here. Astra, which is just this absolute behemoth
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  in their Indonesian portfolio, saw its net income drop by 3%.
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  Now, it still contributed an incredible $927 million to JC&C, but it was a decline.
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  And then Tunis, their other automotive holding there, it just fell off a cliff.
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  It really did. It dropped heavily by 46% down to just $18 million.
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  Yeah. What exactly went wrong in Indonesia? Well, to understand that 8% drop,
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  you have to look at the economic reality of the everyday Indonesian consumer.
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  Yeah. And specifically in the automotive sector.
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  Now, the industry shorthand you'll see in these reports, just to translate the
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  jargon, is 4W for four-wheel passenger cars and 2W for two-wheel motorcycles.
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  Okay. 4W and 2W. Got it. So, the
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  wholesale market for four-wheel cars in Indonesia dropped by 7% in 2025.
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  Ouch! Yeah. But here is the crucial mechanism.
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  It wasn't a drop across the board. The weakness was highly, highly concentrated
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  in the entry-level segment. Meaning like the working class or middle class consumer. Exactly.
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  Everyday consumers were really feeling the pinch of inflation and broader economic pressures.
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  And, you know, when purchasing power shrinks, buying a brand new car is the
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  very first thing a family delays. Right. You just keep the old car running for another year.
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  Precisely. And because Astra is so utterly dominant in that specific entry-level
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  space, they felt the absolute brunt of that hesitation.
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  Their market share actually slipped down to 51 percent amid some really intensified competition.
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  So the entry-level consumer is hurting and new car sales drop. That makes total sense.
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  But reading through the documents, the pain wasn't just isolated to the automotive showrooms, was it?
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  No, it wasn't. The heavy equipment and mining sector, which they refer to as HEMCE.
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  That also took a massive hit. It dropped 24 percent.
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  24 percent. Wow. Why? That's huge. It was a combination of things.
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  Lower mining contracting revenues,
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  lower coal revenues, and even a 2 percent dip in gold sales. Wow.
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  So think about the broader economic machinery happening here.
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  You have a stalling entry-level consumer, delaying car purchases on one side,
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  and a cooling industrial and mining sector on the other.
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  Right. When you combine those two massive macroeconomic forces,
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  you get that 8% overall drag on the Indonesian profit.
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  Okay, but here is what I don't get. If the main car business is stalling because
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  people are broke and the mining sector is cooling off, how did Astra still manage
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  to contribute $927 million?
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  Right. I mean, how did they not just completely sink the overall numbers?
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  This is where the true value of the conglomerate model reveals itself.
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  The cargo ship analogy you used earlier. Right, the other engines.
• 8:32
  Exactly. We need to look at how different parts of a massive business act as
• 8:36
  counter-cyclical safety nets.
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  While cars and mining were down, Aptra didn't just sit there taking a beating.
• 8:42
  No. No, their agribusiness, for example, was a star performer.
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  Net income there was actually up 28%.
• 8:48
  Oh, right. I saw that in the report. Driven by a 13% increase in sales volume
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  and an 11% rise in CPO prices.
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  And just to clarify for the listener, CPO is crude palm oil,
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  correct? That's a major global commodity export for Indonesia.
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  Yes, crude palm oil. When global commodity pricing for palm oil goes up,
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  Astra captures that upside.
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  But it wasn't just palm oil. Their infrastructure division, which heavily features
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  toll roads, grew by 24%. I want to focus on that for a second because it makes
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  so much sense when you think about human behavior. How so?
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  Well, even if an Amnesian family decides they can't afford a brand new car this
• 9:26
  year, they still have to commute, right?
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  They still have to drive the car they already own on the toll roads to get to work. Exactly.
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  Toll revenues provide incredibly reliable, almost utility-like cash flow.
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  It doesn't matter whether new car sales are beaming or busting, people need to drive.
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  And to add to that, their financial services division grew by 9%.
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  Let me guess, people still need loans even if they aren't buying cars? You nailed it.
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  That 9% growth was largely driven by an increase in multipurpose consumer financing.
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  The consumer might be priced out of a new vehicle, but they still need credit
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  for other life essentials.
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  Okay, so toll roads, loans, and palm oil kept them afloat. But there is one
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  specific strategic move in these Indonesian documents that really caught my eye. Oh, which one?
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  So Astra partnered with Toyota and Toyota injected 120 million U.S.
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  Dollars for a 40 percent stake in Astra Digital Mobile, which is their used car platform, OLX Mobi.
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  Ah, yes. It is a brilliant defensive play. Is it, though?
• 10:26
  You don't think so. I want to push back on this a bit. Go for it.
• 10:28
  Is leaning into used cars with Toyota really a masterstroke long-term strategy,
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  or is it just a temporary band-aid to cover up the fact that their core customer
• 10:39
  base in Indonesia currently lacks the purchasing power for new cars?
• 10:43
  Well, it's a very fair question.
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  But it's actually a master stroke of market capture. Okay, explain that.
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  Think about the economic flow.
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  If consumers don't have the purchasing power for new cars, their demand for
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  mobility doesn't just disappear.
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  Right. It just shifts downstream. They go to the used car market.
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  By partnering with an absolute powerhouse like Toyota to dominate that secondary
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  market, Astra is ensuring that even when the consumer trades down,
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  the money still flows into Astra's ecosystem.
• 11:12
  Oh, I see. They are essentially catching the consumer as they fall down the pricing line.
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  They keep them in the family. And the data proves this counter cyclical strategy
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  worked perfectly because while new car sales struggled, their used car sales
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  were up 21 percent in 2025.
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  21 percent. Wow. Yeah. A hundred and twenty million dollar injection from Toyota
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  is a massive institutional vote of confidence.
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  It says this isn't just a bandaid. It's a permanent structural advantage in the market.
• 11:40
  Okay, that makes a lot of sense when you map out the consumer behavior like that.
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  So Indonesia was all about survival, defense, and, you know,
• 11:47
  these counter-cyclical safety nets. Exactly.
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  But if that was the anchor slowing things down, where was the actual offense?
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  What parts of the business provided the growth to keep the overall profit flat
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  at $1.1 billion? For that, we have to look north to Vietnam.
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  Vietnam was the undeniable growth engine in 2025.
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  Really? Oh, yeah. The profit contribution from Vietnam surged 25% to $129 million U.S.
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  Dollars. Okay, let's break down where that growth actually came from.
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  First, you've got Thaco, which is a major automotive and real estate player in Vietnam.
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  Their contribution to JCNC was up 39%. That's a huge chump. It is.
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  And the documents note they had a robust real estate sales, and they moved 64,000
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  passenger cars and 26,000 commercial vehicles.
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  And then you have RE, Refrigeration Electrical Engineering, and their profit
• 12:37
  contribution was also up 39%. Yeah, and REE is a perfect example of looking
• 12:42
  toward the infrastructure of the future. How so?
• 12:44
  Well, their growth was heavily driven by their renewable energy business,
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  specifically hydropower.
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  And JCNC clearly sees the long-term secular growth trend here because they didn't
• 12:56
  just sit on their existing shares.
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  They actively increased their stake in REE to 41.7% during the year.
• 13:03
  Oh, putting more money into renewables. Exactly.
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  And we also saw really strong numbers closer to home, too.
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  In their regional interests segment, which includes the cycle and carriage motor
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  business in Singapore, the contribution was $56 million.
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  Right. And Cycle and Carriage specifically saw a 49% profit jump that was massively
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  boosted by a 74% increase in commercial vehicle sales.
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  74% is incredible. So while everyday Indonesian families were,
• 13:29
  you know, holding back on buying cars, the commercial sectors in Vietnam and
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  Singapore were just accelerating.
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  It's the ultimate validation of geographic and sector diversification.
• 13:39
  Yeah. The cargo ship is working.
• 13:41
  Now, here is where we hit what I think is honestly the most fascinating part
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  of these entire documents. Okay, what did you find?
• 13:47
  We just talked about JCNC buying more of REE, right? Leaning heavily into Vietnamese renewables.
• 13:53
  But they also sold off a huge chunk of a very famous, very reliable asset,
• 14:00
  Vinamilk, the massive Vietnamese dairy company.
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  Yes, they did. And I'm looking at the exact numbers here. They sold a 4.6% stake for 228 million U.S.
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  Dollars in late 2025, and then another 3.5% for $188 million in early 2026.
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  My question is, why kill the cash cow?
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  I mean, Vino Milk still contributed $33 million in dividend income to JC&C in 2025.
• 14:22
  It's profitable. It's totally stable. Why let go of that reliable cash?
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  This brings us to the ultimate aha moment for anyone studying how top-tier conglomerates
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  actually operate. Okay, I'm ready.
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  It all comes down to a strategy called capital recycling.
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  Management teams at this level, they aren't just collecting companies to hold
• 14:39
  them forever like trophies on a shelf.
• 14:42
  Right. You need ruthless unsentimentality.
• 14:45
  Vinomilk is a fantastic, stable company, but dairy is a mature, slower-growth asset.
• 14:51
  It's not going to suddenly double in size overnight.
• 14:54
  I mean, people only drink so much milk. Exactly.
• 14:56
  Think of it like pruning a mature oak tree. You cut off a perfectly healthy,
• 15:00
  heavy branch so you can use those resources to plant new saplings that have far more room to grow.
• 15:06
  Management took the cash from pruning Vinomilk and put it to work in two very specific ways.
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  Which were? First, they used it to pay down that corporate debt we talked about at the very beginning.
• 15:15
  Less debt equals less risk, lower interest payments, and ultimately a higher
• 15:20
  TSR. Right. It all connects back to the debt reduction. Exactly.
• 15:24
  And second, they redirected that capital into higher growth,
• 15:27
  future-facing opportunities.
• 15:28
  For instance, in 2025, Astra acquired Mega Manungal Property. And what do they do?
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  They're a leading industrial logistics player in Indonesia.
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  So they are moving their money out of traditional dairy and into modern warehouses,
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  digitally used car platforms, and renewable hydropower.
• 15:46
  It's a highly proactive shift away from the legacy economy and directly toward
• 15:52
  the infrastructure of the future. That is such a crucial takeaway.
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  Because it takes incredible discipline for a management team to sell off a beloved,
• 16:00
  highly profitable division just to pay down a credit card and buy some warehouses.
• 16:05
  It really does. But that ruthless unsentimentality is the actual secret engine
• 16:09
  behind their 17.5% five-year return. Absolutely.
• 16:13
  They aren't falling in love with their assets. They're falling in love with capital efficiency.
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  So we've analyzed the 2025 scorecard.
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  We've looked at the defensive maneuvering in Indonesia, the aggressive growth
• 16:23
  in Vietnam, and the discipline of their capital recycling.
• 16:26
  But markets don't care about the past. They are entirely forward-looking. Always.
• 16:31
  Based on these documents, what is management signaling to you and me about the
• 16:35
  future risks and expectations as we head deeper into 2026?
• 16:39
  Well, management is being very clear-eyed and sober about the risks.
• 16:43
  They state plainly that the operating environment in Indonesia will remain challenging.
• 16:48
  So they aren't predicting a sudden miraculous boom in consumer spending.
• 16:52
  Not at all. However, they do know to hope for a, quote, moderate recovery in consumer sentiment.
• 16:59
  Just a moderate recovery. So very cautious optimism on their biggest anchor. Very cautious.
• 17:05
  But on the opportunity side, they expect Vietnam to continue its robust growth trajectory.
• 17:11
  The transition to renewables and infrastructure there is a long-term tailwind.
• 17:15
  And Singapore is viewed as a highly resilient anchor that will continue to deliver
• 17:19
  stable earnings, particularly in the commercial space.
• 17:22
  And I also noticed in the financials, they are still squeezing every single
• 17:25
  drop of efficiency out of the corporate level.
• 17:27
  Yes, the focus on corporate efficiencies is relentless with these guys.
• 17:31
  For example, in 2025, they recorded a $26 million translation gain on foreign currency loans.
• 17:37
  Wait, meaning they made $26 million just by being smart about how they manage
• 17:41
  the different currencies they operate in. Exactly.
• 17:43
  It's elite treasury management. It shows they are optimizing every single level
• 17:48
  of the business, not just the physical operations of selling cars or palm oil,
• 17:52
  but the underlying financial plumbing itself.
• 17:55
  Why does all of this matter to you, the listener? If you are an investor looking at Southeast Asia…
• 18:01
  Analyzing JCNC is essentially like looking at a macroeconomic proxy for the
• 18:06
  entire region's economic transition. That's a great way to put it.
• 18:10
  You are getting direct exposure to the rising middle class in Vietnam,
• 18:13
  the complex infrastructure and commodity cycles in Indonesia,
• 18:17
  and the overall regional shift toward sustainable energy and modern logistics.
• 18:21
  That really is the ultimate takeaway here.
• 18:24
  Management's stated goal in these documents is, quote, building a portfolio
• 18:28
  aimed at creating sustainable value. As an investor, they're asking you to judge
• 18:33
  them, not quarter by quarter, on exactly how many entry-level cars Astra sells in Jakarta.
• 18:39
  They want to be judged on their ability to act as savvy, unsentimental capital
• 18:42
  allocators over a five-year horizon.
• 18:45
  Can they navigate the rough macroeconomic seas and still deliver that 17.5% five-year TSR?
• 18:53
  The 2025 results suggest they absolutely have the discipline to do exactly that.
• 18:58
  Let's quickly recap what we've uncovered today.
• 19:01
  JCNC delivered a highly stable $1.1 billion profit by expertly balancing a struggling
• 19:07
  Indonesian entry-level consumer
• 19:08
  against booming Vietnamese renewables and commercial infrastructure.
• 19:12
  And they managed to do all of this while aggressively paying down their corporate
• 19:16
  debt, ruthlessly recycling their mature assets, and rewarding their shareholders
• 19:20
  with a massive 34% one-year return.
• 19:24
  It truly is a masterclass in how a conglomerate should operate under pressure.
• 19:28
  It really is. And, you know, this raises an important forward-looking question
• 19:31
  for investors to mull over.
• 19:32
  What's that? When we want to invest in the future, we almost always look for
• 19:36
  flashy, dedicated green tech startups. Right, the new, trendy companies.
• 19:40
  Exactly. But as we see JCNC pouring massive resources into hydropower in Vietnam
• 19:45
  and digital counter-cyclical used car platforms in Indonesia,
• 19:49
  are these old-school traditional conglomerates actually becoming the real quiet
• 19:54
  heavyweights of the sustainable transition?
• 19:56
  Wow. It's something every investor should think about. A brilliant thought to end on.
• 20:00
  Thank you for joining us for this deep dive into the numbers,
• 20:03
  the strategies, and the underlying mechanics of JCNC.
• 20:06
  We will catch you next time. This content is intended to serve strictly and
• 20:09
  only as an informational, independent, objective summary of recent events and
• 20:14
  should no way be interpreted, construed or relied upon by any party as inside
• 20:18
  information or financial advice.