Good morning, and welcome to the Jardine Matheson 2023 full year results presentation. I'm John Witt, Group Managing Director, and I'm joined by Graham Baker, our Group Finance Director. This is the first time we are hosting this presentation, both in person and online for some time, and it's good to see so many familiar faces in the room in Hong Kong here this morning. Over the next half hour, I'll update you on progress against our group's strategic priorities. Graham will then take you through the financial performance of the group and our individual businesses. We'll end with the outlook and the Q&A. For those online, you should be able to see the slides on your screen and the Q&A box at the bottom of your page. Please submit your questions at any time as we go through the presentation, and we'll answer them at the end.
Our diverse portfolio of market-leading businesses across geographies and sectors generates strong cash flows and enables us to deliver resilient performance across cycles. This is seen in the large increase in the contribution from Astra, from less than 30% four years ago to 44% in 2023. We continue to be focused on our core regions of China and Southeast Asia, and over the long term, we expect both China and Southeast Asia to make balanced contributions to our growth and earnings. Contributions from our Southeast Asian businesses have increased to 56% from 42% in 2019. Our diversified businesses continue to grow and prosper, despite challenging market conditions across the region. Looking now at progress we have made over the past year on our strategic priorities, starting with enhancing leadership and entrepreneurialism.
The group made several significant senior appointments in 2023 to enhance leadership and drive future growth. These included new chief executives at DFI Retail, Mandarin Oriental, Hongkong Land, and Jardine Pacific. Scott Price succeeded Ian McLeod as Group Chief Executive of DFI Retail. He's an experienced senior executive with 25 years international experience, mostly in Asia, spanning retail, logistics, and consumer packaged goods. Since joining in August 2023, Scott has introduced a strategic framework which will support DFI Retail's capital allocation priorities and growth plans over the coming years. Laurent Kleitman succeeded James Riley as Group Chief Executive of Mandarin Oriental. Laurent was President and CEO of Parfums Christian Dior and brings many years experience in building iconic consumer brands across the beauty and broader FMCG sectors.
He aims to scale up Mandarin Oriental's management business, further elevating the brand as the reference point in luxury hospitality for both guests and hotel owners. In November 2023, we announced that Michael Smith will succeed Robert Wong as Chief Executive of Hongkong Land, with effect from the first of April. Michael brings 30 years of real estate, capital markets, and investment banking experience. He was most recently regional Chief Executive Officer of Europe and the United States at Mapletree Investments, a global real estate development, investment, capital, and property management company. Elton Chan, who is currently Chief Executive of the Jardine Schindler Group, will succeed Y.K. Pang as Chief Executive of the Jardine Pacific Group of companies on Y.K.'s retirement on the first of April. Elton has been with Jardine since 2004 and has worked in a range of senior management roles across the group.
During the year, we also announced the appointments at Jardine Matheson of two new independent non-executive directors, Janine Feng and Keyu Jin. These appointments mean that the board now comprises 50% independent non-executive directors and bring important diversity to the board. A crucial part of building an entrepreneurial culture is finding, developing, and keeping the right leadership talents, and this is a high priority for us. It is also essential to have the right management structure to support the future development of our portfolio and new growth areas. We continue to invest in developing our leaders and giving them opportunities to advance. We have seen multiple senior management progressions during the period, and we have supplemented our talent planning with group-wide leadership development programs, co-designed with world-class institutions.... Finally, we are focused on building a diverse and inclusive culture where everyone can succeed.
Our inclusion, equity, and diversity strategy includes a five-year target with an initial focus on gender representation. Turning to evolving our portfolio, our capital allocation and portfolio strategy allows us to seize opportunities when they arise, to optimize our portfolio and build for future growth. We focus on further strengthening our position in the high potential markets of Asia and in those industries where we can establish a leading position. To create long-term value and ensure sustainable growth, in 2023, the group continued to make strategic investments, particularly in Southeast Asia. Astra continued its diversification into non-coal assets as part of its commitment to a just transition with its subsidiary, United Tractors, acquiring interest in the nickel mining and processing businesses of Stargate and Nickel Industries. United Tractors also invested into Supreme Energy Sriwijaya, which owns an operating geothermal project in Southern Sumatra.
Astra progressed its healthcare strategy through an additional $100 million investment in Halodoc, a leading digital health ecosystem platform in Indonesia. The group further reinforced its commitment to Vietnam in the period. JC&C invested an additional $350 million in THACO through subscription for a 5-year convertible bond, and also increased its investment in REE Corporation. We also continue to simplify the group's portfolio, laying the foundation for the next stage of growth. In June 2023, we sold our motors business in the United Kingdom for $402 million. In September, the group completed the sale of its 28% stake in Hong Kong-listed Greatview. In March this year, we completed the sale of Jardine Aviation Services. Among our subsidiaries, DFI Retail disposed of its Malaysian grocery retail business, and Mandarin Oriental sold 2 hotels, retaining management contracts.
We will continue to look for appropriate opportunities to recycle capital. Looking now at innovation and operational excellence, the group and its businesses continued to make good progress in driving greater efficiency and productivity. Hactl increased its capacity to handle pallets by 30%, enhanced its use of robotics, and introduced automation more generally to increase efficiency. DFI Retail implemented new strategic framework needed to drive sustained growth with a revised organization structure, which moves decision-making closer to customers at lower cost and focuses on driving enhanced shareholder returns. In our consumer-facing businesses, in November, Astra launched Bank Saqu, a digital banking service with a focus on small business owners and entrepreneurs. 100,000 new customers joined in less than a month of its opening. In the automotive space, Astra acquired OLX, a leading online used car platform in Indonesia.
OLX has been integrated in Astra's existing used car business, positioning the business as a leader in both offline and online car sales as that market grows significantly. In June 2023, Jardine Cycle & Carriage announced a used car and after-sales partnership with Carro, a leading online platform in Singapore. Mandarin Oriental is implementing its guest experience program to improve its ability to recognize, understand, and engage guests. It is also establishing a bespoke relationship management service to build brand loyalty. We continue to seek inorganic growth opportunities in the digital economy, emerging industries, and new geographies, such as Astra's partnership with Equinix to develop data centers in Indonesia. We progressed the implementation of an in-house global business services function. This provides a range of core back office services to our businesses across the group.
As a long-term business, sustainability is at the forefront of our business practices, and we have made significant strides in progressing our agenda since we started to focus on this area as a group some four years ago. The culture within the group is fast becoming one where sustainability is seen as a business opportunity and an integral part of our day-to-day business lives. I'm pleased to say that the improvements our businesses have made in this area were recognized by increased ratings from ESG agencies. We're increasingly focused on the three main pillars of our sustainability strategy: leading climate action, driving responsible consumption, and shaping social inclusion.... We continue to build momentum on our net zero strategy, and our businesses have set decarbonization targets to align with the trajectory needed to limit global warming to 1.5 degrees Celsius.
All of our businesses have also developed decarbonization pathways to achieve their targets for reducing Scope 1 and 2 emissions. We're also working over time toward understanding and reducing Scope 3 emissions. Good business is sustainable business, and with our focused approach, we believe the future growth of the company will also benefit the communities in which we invest. Sustainability is no longer simply a separate agenda, but is embedded now as a core element of our strategy, and all of our future investments will take account of it as a key part of the decision-making process. In driving responsible consumption, most businesses have identified the material waste streams and set individual waste reduction or diversion targets, and we are looking for synergies and cooperation opportunities between our businesses on circular solutions.
We're also building up our expertise to understand our dependencies and impacts on biodiversity, so that we can adopt industry-leading practices for biodiversity management. Our Indonesian businesses face sensitive environmental and biodiversity issues, but we believe that they're taking appropriate and extensive actions to manage them, and have also made great efforts to increase transparency in this regard. In relation to shaping social inclusion, we are prioritizing the promotion of access to quality education and efforts to increase awareness of mental health. We now hand over to Graham to go through the group's financial performance for the year. Graham?
Thank you, John, and hello, everyone. The group delivered a very solid performance in 2023, with underlying profit now above pre-pandemic levels. Our diversified portfolio continued to generate strong cash flows, maintaining a strong balance sheet, while also affording capacity to continue investing for future growth. 2023 saw particularly large investments at Astra. At group level, we saw total revenue for the year of $36 billion, 4% down from last year, primarily due to the sale of the group's UK motor operations and DFI's Malaysia grocery business. Revenues at ongoing subsidiaries grew 2%. Underlying net profit was $1.66 billion, 5% above 2022, and a 7% increase at constant exchange rates. Underlying earnings per share was $5.74, also up 5%.
The board is recommending an increased final dividend of $1.65 per share, which produces a full-year dividend of $2.25, up 5% from 2022. This is in line with our ongoing commitment to progress the dividend as earnings grow. Looking across the businesses, 2023 saw another record performance from Astra and strong recoveries at DFI Retail and Mandarin Oriental. There were, however, challenging conditions on the Chinese mainland and in Vietnam, which adversely impacted Zhongsheng, Hongkong Land, and THACO in JC&C. I'll go through the performance of each business later, so we'll note just two further points here. Within the $160 million headwind from our motor interests, $124 million was lower contribution at Zhongsheng and $36 million, the sale of JMG UK.
Of the drop at Zhongsheng, approximately 60% reflects the impact of highly competitive market conditions in the Chinese mainland new car market, following a record performance in 2021, the tail end of which we reported in JM's 2022 first half. The remaining 40% was a result of the change to a new accounting approach for Zhongsheng in 2023. I'll cover the details of this later. Second, lower corporate costs in 2023 principally reflect unrealized mark-to-market gains on certain investment funds, reversing similar unrealized losses recorded in 2022. Overall, 5% growth amid challenging conditions in two of our three core growth markets demonstrates, once again, the value of our diversified portfolio spread across both North and Southeast Asia.
Nevertheless, we did experience markedly different conditions in the second half of the year from the strong start we made in the first half. Strong growth at Astra, DFI and Mandarin Oriental continued across the year, but more difficult trading conditions and stronger comparables in 2022 tempered their contribution in the second half. Similarly, Hongkong Land saw weaker performance in the second half as conditions in the mainland development properties business continued to progress and remain challenging. Although JC&C saw conditions begin to stabilize in Vietnam, overall, the group was flat in the second half of the year.
Challenging market conditions have continued into the opening months of 2024, and although we're optimistic that our motors businesses will not bring such a large headwind this year, softening commodity prices as well as market sentiment in our key sectors means we begin the year with a cautious outlook for short-term growth. Taking a quick look back over the period as a whole since 2019, the group has grown underlying earnings per share cumulatively by 36% and full year dividends per share by 31%. At constant exchange rates and net of businesses disposed during the period, underlying EPS grew by 45%. Well, I think you'll all understand that these very strong progressions reflect, to a large degree, the returns we have made to shareholders through both share buybacks and purchases within the group, including the privatization of Jardine Strategic early in 2021.
In total, these contributed more than 90% of EPS growth. We have also now exceeded our pre-pandemic record results record in 2018. We have also built a foundation which offers shareholders in Jardine Matheson a substantially increased dividend, which at current prices, represents a trailing yield of around 5.7%, and is covered approximately 1.7 times by recurring cash flows after corporate and financing expenses at the parent company level.
I'd note also that although we've prioritized debt pay down at the parent company level in 2023, and will continue to do so in 2024 in order to create flexibility to invest for future growth, the company repurchased 4.4 million of its own shares for cancellation in 2023 for $209 million, primarily in order to cancel the impact of scrip issues during the year on overall share count and EPS. Outside underlying earnings, the group recorded a net non-trading loss of $975 million in 2023. The largest component of our non-trading items was a net unrealized loss on the usual revaluation of the group's investment properties during the period.
Primarily, a net loss of $710 million related to Hongkong Land's IP portfolio and $391 million related to Mandarin Oriental's Causeway Bay site. Impairments of assets in 2023 totaled $172 million and were principally against goodwill in DFI Retail's grocery operations in Macau and Singapore. Gains on property sales of $105 million included $65 million from the sale and leaseback of JC&C's motor properties in Singapore. The other non-trading item of note is the group shares of Zhongsheng's results in the second half of 2022. Zhongsheng's own interim and annual results have historically been reported after our results announcements. In previous years, therefore, we recognized our 21% share of Zhongsheng based on publicly available information. In other words, six months in arrears.
As noted last year, we believe a better representation of current performance will be given by reporting on a calendar year basis. Accordingly, the group has changed its accounting for Zhongsheng from 2023 to reflect an estimate of our share of their results for the second half of 2023, based on recent external analysts' forecasts. Our share of Zhongsheng's profits for the gap period of $101 million, representing results for the second half of 2022, has therefore been treated as a non-trading item so as not to distort the current year's underlying performance. Moving to the group's balance sheet. Net borrowings at the thirty-first of December, excluding financial services, grew to $8.4 billion. Gearing increased from 13% at the end of 2022 to 15%.
This increase reflected a $2.2 billion reduction in Astra's net cash, excluding financial services position, which more than offset a $1.4 billion decrease in net borrowings across the remainder of the group's listed entities. Astra's cash position is reflected on the slide as part of JC&C's consolidated net debt. Astra's lower net cash reflected major investments and returns in the year, offsetting strong continued operating cash inflows. Organic CapEx investments of $1.5 billion, principally at United Tractors, to renew capital equipment following the pandemic. Strategic investments of over $1 billion, the largest of which were UT's associate interest, acquired in Nickel Industries for $616 million, and its acquisition of Stargate for $285 million.
$1.7 billion of returns to external shareholders at Astra and its subsidiaries, including its enhanced 2022 final dividend payout. JC&C's own corporate level net debt dropped from the end of 2023, from $1.5 billion to $1.3 billion, as a result of the higher dividend received from Astra, partly offset by investment in THACO's convertible bonds. At Jardine Matheson Corporate, lower net borrowings at the end of December mainly reflected proceeds from the sale of the Group's UK motor operations and Greatview. Share buybacks to eliminate the impacts of scrip on EPS and small share purchases in group companies were primarily funded from recurring cash flows. Turning now to cash and liquidity.
Net cash, cash flow from operations was slightly below 2022, despite higher cash generated from operations, and this reflected higher financing costs and tax paid. The group's businesses continue to be cash generative, supported by strong balance sheets. The group has around $14 billion in cash and undrawn committed borrowing facilities and substantial capacity to deploy capital to finance future growth. I'll now briefly go through the individual performance of each business. For a detailed analysis, you can access the results briefings of most of our business units via our Jardine's corporate website. Starting with Astra, which was the largest contributor to the group's underlying net profit. The group owns its interest in Astra through JC&C, and the numbers on this slide reflect the contribution made by Astra to JC&C.
Astra performed strongly, with earnings growth reflecting improved performances for most of its businesses, especially its automotive and financial services divisions. The contribution from the automotive division grew by 15% to $342 million, reflecting higher sales in the motorcycle and components businesses. Astra's market share for car sales increased from 55%-56%, while its market share for motorcycle sales increased from 77%-78%. Astra Otoparts, the group's components business, reported a 39% increase, and Astra Financial Services contribution increased by 28%, primarily due to improved performances by its consumer finance business. The contribution from heavy equipment, mining, construction, and energy was stable in the year as a whole, with better performances from construction machinery and mining contracting, offsetting lower contributions from the group's coal and gold mining businesses.
Second half results, however, were lower, primarily as a result of lower coal prices. Agribusiness saw its contribution fall by 45%, largely due to lower selling prices of crude palm oil. There was an 81% increase in the contribution from infrastructure and logistics due to an improved performance in the toll road, transportation solutions, and logistics businesses. The group's toll road concessions saw 7% higher daily toll road revenue during the year. Turning now to Hongkong Land. Underlying profit fell by 5% to $734 million. Performance was impacted by lower profits from development properties, which offset improved results from investment properties. In investment properties, there was a better performance from the group's luxury retail in Singapore and Macau office portfolios, offsetting reduced contributions from the Hong Kong office portfolio.
Average retail rents in Hong Kong increased from HKD 177 per sq ft in 2022 to HKD 203 per sq ft in 2023, mainly due to increased tenant sales and the removal of temporary rent relief. The Landmark retail portfolio saw a steady recovery in tenant sales and footfall. However, the average office rents in Hong Kong were lower than 2022 due to negative rental reversions. Nevertheless, the group's Central office portfolio remained resilient and outperformed the weaker overall market. Vacancy was well below that for the Central Grade A office market, and in Singapore, the office portfolio performed well, with average office rents increasing and vacancy remaining low.
The group's Beijing and Macau luxury retail portfolio saw higher contributions than the previous year, while in Shanghai, work continued to progress well on the West Bund development. In development properties, as anticipated, the profit contribution from the Chinese mainland was lower than last year due to a combination of lower sales, reduced profit margins, and the impairment of some residential-for-sale assets. In Singapore, the profits recognized from the development properties business were largely in line with the prior year. The group's joint venture projects in the rest of Southeast Asia performed within expectations, producing a combined profit contribution in line with last year. Jardine Pacific reported a net profit of $164 million, 10% lower than 2022. Most businesses saw good performances, but our consumer businesses continued to be impacted by weaker consumer sentiment in Hong Kong.
Within the group's B2B businesses, Jardine Schindler recorded higher sales and a stable contribution from the existing installation business, which helped offset the challenging new installation market. JEC's Hong Kong businesses reported solid performance, while its regional businesses saw improvements. The order book remained strong. Gammon reported higher profits, reflecting higher sales and ongoing operational improvement.... projects in which continue to generate encouraging results. In transport services, Hactl saw good performance despite lower cargo volume and higher financing costs. Jardine Aviation reported a net profit for the year. Hactl continues to face labor shortages. The group's consumer businesses faced challenges. Jardine Restaurant delivered a net loss with macro challenges across all markets and the absence of government support received in Hong Kong last year. Zung Fu Hong Kong reported a lower profit year-on-year, with the overall contribution from Mercedes decreasing and supply constraints experienced in, by Hyundai.
The business also incurred startup costs from the newly acquired Smart and Denza car distributorships. Moving to Zhongsheng, as part of our Jardine Motors interests, the group received a substantially lower underlying contribution of $139 million from its 21% interest in Zhongsheng in 2023, as its new car business faced a challenging market environment for new luxury vehicle sales volumes and margins during the year. This was due to China's EV transition and intense auto market competition. We have noted the change in our accounting for Zhongsheng already, so I won't repeat that here. Despite challenging short-term market conditions, we believe that Zhongsheng has strong market insight, deep relationships in the Chinese mainland premium vehicle segment, and superb capabilities to execute its well-developed strategy focused on growth in after-sales service and used cars, which will deliver long-term value for the group.
DFI reported underlying net profit of $155 million for the full year, a substantial improvement on its $29 million profit last year. This increase was supported by strong growth in profitability across subsidiaries and improved performances by the group's associates. Sales revenue was flat at $9.2 billion. However, excluding the impact of the divestment of the Malaysia food business, DFI's revenue grew by 5%. Underlying operating profit for the food division was $45 million, down 51%. North Asia performance was impacted by the absence in 2023 of the pantry stocking behavior seen during the fifth wave of COVID in Hong Kong in the equivalent period in 2022. But performance improved in the second half. Southeast Asia was adversely impacted by intense competition and weakening consumer sentiment.
Total convenience sales were up 8% to $2.4 billion, and underlying profit was $88 million, up 74%. In Hong Kong, there were strong sales in the first half, while sales were broadly in line with the prior year for the second half, reflecting increased traveling abroad by Hong Kong residents. 7-Eleven South China and 7-Eleven Singapore both benefited from their reopening in their respective economies. In the health and beauty business, revenue increased by 21% to $2.4 billion, with like-for-like sales growing by over 20%. The successful performance was driven in particular by a recovery in tourist traffic from markets reopening and gross margin improvement. IKEA reported 5% lower sales revenue of $794 million, and lower profit as the business was impacted by reduced home renovation and furniture demand.
In associates, Maxim's reported a strong recovery, more than doubling its profit contribution from 2022 as customers returned to dining out. The group's share of Yonghui's underlying losses was lower at $36 million, compared to $80 million in 2022, and Robinsons Retail's underlying profit contribution fell from $24 million to $15 million. Turning now to JC&C, the group reported $1.16 billion in underlying profit, mainly supported by record results from Astra. Beyond Astra, underlying profit was $104 million of $141 million, was 23% below the prior year. This primarily reflected THACO's contribution, which was 57% down, mainly due to lower automotive profits as a result of weak consumer sentiment in Vietnam.
Direct motor interests contributed $68 million, an increase of 8%, with higher profits from Tunas Ridean in Indonesia and Cycle & Carriage Bintang in Malaysia. Finally, the contribution from the group's other strategic interests was 2% down at $84 million due to lower earnings at REE, offset by higher profits in Siam City Cement. Dividend contribution from Vinamilk was stable. Mandarin Oriental's strong improvement in performance in 2023 reflected robust global appetite for luxury leisure travel. Underlying profit increased to $81 million from $8 million in 2022. Owned hotels returned to profit. The management business delivered strong operating performance and improved its profitability. Combined total revenue for hotels under management was $1.9 billion, up 21% from 2022.
This was primarily due to an increase in revenue per available room, driven by a gradual recovery of occupancy across all geographies, a continuation of high rates in EMEA and a solid rebound in rates in Asia. Food and beverage revenue increased by 18% year-over-year. In 2023, the group opened 2 new hotels and completed 1 rebranding, expanding its total portfolio to 38 hotels and 9 branded residences. 8 new projects were announced in 2023. The group has a strong development pipeline, with a total of 28 hotels and 2 standalone residences expected to open in the next 5 years. With that, I'll now hand back to John.
Thank you, Graham. Turning now to the group's outlook. After a very solid 2023, albeit with growing headwinds in the second half, the group enters 2024 facing continued challenges across China and Vietnam, as well as lower market prices for a number of Astra's key commodities. We're therefore cautious of the short-term profit growth outlook. However, we remain confident in our long-term strategy across our core markets in Asia. We will continue to focus on our strategic priorities in order to deliver growth and long-term value, benefiting from our diversified portfolio. With that, we come to the end of our presentation, and we've been now delighted to take questions both from the room, but as well as those coming in from online. We have received one during the presentation online.
Maybe for the purposes of the room, I shall read it out. Graham, I think this is one we can both contribute to. It's a question from William Chung at CIMB Research. The question is: Given the simplification of the Jardine group structure, has the company performed further evaluation on the cost benefit of having Jardine Cycle & Carriage remain as a listed company? Can you elaborate on the parent company's view of this? I would say first, Graham, before you, I think talk us through the sort of our general approach in terms of capital allocation. I'd say the simplification we did with Jardine Matheson and Jardine Strategic a few years ago was a very specific transaction.
You'll recall that Jardine Matheson and Jardine Strategic had a cross-shareholding between them. And so in privatizing, effectively, Jardine Strategic, we significantly simplified the really top holding of the company. It was a very specific part of the structure, quite different from the individual subsidiaries, like Jardine Cycle & Carriage or DFI and the others. But maybe, Graham, you can take us more generally.
Sure. I think perhaps just a couple of other specifics on JC&C. Obviously, with the group's portfolio so diverse, we think it's important to... I'm struggling a little with my microphone. Perhaps if I take it closer. We think it's important to have expert teams close to the businesses that we invest in, and so, having a team based in Singapore, close to our businesses in Southeast Asia, first of all, I think is very important. In relation to the specifics of the listing, we think that the discipline of having a public listing and shareholders for that team to answer to continues to be of use and of value and importance.
If I then talk to the general question of how we think about, capital allocation across the group, we've remained very consistent with the priorities that we have had for many years, and that we published back in 2020, starting with organic investments in the sustainable growth of our portfolio companies, followed by supporting the continued progression of the dividend. And then we think about, M&A opportunities, both within our existing portfolio and within the outside world on a level playing field, prioritizing value, growth, and risk.
Within that context, over the last few years, in combination with the $5.5 billion acquisition of the minority interest in Jardine Strategic, we've also deployed in excess of $1.5 billion, picking up shares in the portfolio companies, either through buybacks at their own level or through investments that we've made in the portfolio directly. And therefore, where we are today is, we've done a lot of that, and therefore, we're prioritizing our focus at this point in time on continuing to improve the quality of the balance sheet, as well as looking for external opportunities in the outside world and building flexibility in order to invest further in those. Nothing to announce, nothing to say further on JC&C.
We have picked up, during 2023, a few shares in JC&C, as we did in the Mandarin, and we also saw our interest increase in Hong Kong Land, as well as share buybacks that we operated at the parent level. But there's nothing significant in that. It's just part of our normal operating processes.
Thank you. Questions, please.
Hi, John and Graham. This is Jeff from CLSA. Good to see you here. So, one question from me, a really big picture. So if we look through into the next, let's say, 18-24 months, what would be the organic earnings growth driver for the entire group, given the lots of moving parts and a lot of initiatives going on? So just want to hear your view on that. Thank you.
... Sure. I'll pick apart a few pieces, and I'll start with the largest contributor to the group, Astra. As John mentioned, we're a little bit cautious in the current year around some of the pressure that commodity prices will bring. But putting that to one side, we've just got through the election in Indonesia, very smoothly, and it appears that there's continuity of policy. And over the last five years, Indonesia has continued to perform strongly, benefiting from firm commodity prices globally, and a clearer, more business-friendly attitude towards inward investment. We think Astra is very well placed to benefit from that. Its very strong market share positions in the auto segment continue to defy the doubters.
Of course, there will be new competition come into the market, but I think that the world has started to wake up to the strong proposition, particularly in the hybrid sector, that our key OEM partners bring, which we believe will continue to be important and relevant in the Indonesian market. Of course, much depends on the growth of the overall auto segment in Indonesia, and that has, for many years, frustrated with its inability to grow beyond 1 million cars a year. But I'd note that average GDP per head in Indonesia has grown to very nearly $5,000 in Indonesia in 2023.
That, of course, is the point at which China suddenly saw a firming, strong middle class driving consumption, and I think that that will continue to be an opportunity for Indonesia, and Astra, to drive growth. The new investments that have been made in the mining sector, and of course, the strong position that we already occupy there, right now, we're probably in a commodity cycle, trough. But of course, Indonesia, enjoys some of the most competitive costs in the world in the key commodities, that should drive growth for Astra going forward.
And of course, its financial services business is also very well positioned to continue to benefit from growing prosperity, not only from the connections that it has with the auto business, but also from the new development with Bank Saqu, the collaboration with WeLab. So I think in Indonesia, we have strong prospects for Astra to continue to perform well in the mid and long term, albeit in the short term, it may not be as large a contributor as it has been in 2023 and 2022 because of that commodity pace.
I would say, I mean, in general terms, we're very excited about Indonesia as a market. Arguably, between 2010 and 2020, I mean, some of our businesses really didn't see some of their key statistics moving, as Graham mentioned. Unit sales of cars, unit sales of motorcycles, probably had peaks earlier in that decade, rather than at the tail end. But I think what we see in terms of the infrastructure of Indonesia, the growing middle classes, the important contribution commodities have made, both to the overall economy, but also into the relative stability of the currency, the inward investments, particularly in the commodity side, I think we're really excited by the prospects of Indonesia going forward.
And I suppose, while we feel a bit more cautious, particularly in North Asia, I think ultimately, if I look at the midterm and the long term, intra-Asian trade will benefit not only Indonesia, but the entire area. Vietnam, as Graham mentioned, had a tough 2023, but we have conviction that Vietnam equally remains in a very strong place. And I suppose that's sort of looking at it from a geographies perspective. But as I said earlier, in terms of these leadership changes, these are very deliberate changes because we want to bring different strategies and accelerate the growth in our individual portfolio companies.
We see already, and we've just had a series of board meetings this past week, and really a very exciting strategy laid out by business both in DFI Retail and the beginnings of the strategy formulation in Mandarin Oriental. And I think sort of clearly, strategy and execution are both things that need to be done right, but I suppose we're filled with conviction as we start on the journey of these two companies. And I suppose we have, with the new appointments at Hongkong Land and JP, these yet to play for. Now, that doesn't, again, take away from the near-term headwinds that we face.
The market is without tailwinds, but again, we continue to manage the basis to build mid- and long-term growth.
Just to round out the question, Jeff, if I then come back to the other key growth drivers, clearly strong cyclical recovery still ahead, potentially for Dairy Farm, particularly in the health and beauty and convenience segments. And ultimately, I think, as you look a little bit further out, potentially in the IKEA segment, as well as, as demand, at some point, will return to the furnishing world. And the Mandarin continuing to go from strength to strength. I see good growth prospects and opportunities there. If we go out a little bit further beyond, I think Hongkong Land, everybody understands, both the Hong Kong and the mainland markets are pretty subdued at the moment.
Going out beyond the next couple of years, we will have the West Bund site in Shanghai added to our IP portfolio in Hongkong and Singapore, 1.1 million square meters of space there—significantly larger than the entire Central portfolio in one of Asia's most vibrant cities. So, the West Bund, ten new developments in luxury and premium retail malls in tier one and tier two cities mean that, again, if we look beyond the immediate term in Hong Kong Land, I think that there are good growth drivers. And indeed, potentially, as we go out to the sort of 5-6 years time frame, a change in the characteristic of Hong Kong Land's earnings profile, more away from development properties towards investment property returning recurring incomes.
Of course, as John said, that is subject to review by Michael Smith, the new CEO. So, short-term caution, but plenty of growth drivers around the portfolio in all of our businesses, as we look out beyond.
Now, there was another question here.
Hi, thank you. This is Karl Chan from J.P. Morgan. So I have two questions. The first question, it's a follow-up on the capital allocation, which you covered quite a bit already. But just dipping a little bit deeper on the mainland China exposure. Because I actually just came back from the Hongkong Land results briefing, across the street. And then, actually last year, Hongkong Land was still buying land in mainland China. And then, when we asked about the reinvestment, it seems like they are still opportunistic, but then they will still be reinvesting in mainland China, right?
So just curious from the group level, what do you think of mainland China as a, as a, you know, the geography for your new investment? Would that be a priority or it sounds like just from the sharing just now, seems like at a group level, we might still be a little bit more excited about Southeast Asia. So just curious a little bit more on that. And then my second question is just about the disposal opportunities. Are we thinking of any, like, disposal opportunities, especially among in our core assets? Yeah, two questions. Thank you.
Yeah. I'll start with the first, Graham. I think in China, we remain confident of the mid to long-term prospects. To be very clear, this is an important area for the group's future development. Now, having said that, I think the current environment is an uncertain environment. We're watching trends currently, so I think there is no great urgency to invest significant amounts of capital, but it's equally an environment where we need to keep our eyes very wide open for potential opportunities. So it's, as I suppose, that is our current thinking in respect of China.
Yeah, I think the only thing I'd add to that is that I think that the pickups in the mainland in 2023 were principally a couple of purchases on existing projects from existing partners to increase Hongkong Land's ownership of ongoing projects. And then I think there was just one very specific, relatively small project in Beijing. So as John said, right now, in the short term, we are very, you know, we're very long China for the mid and long term, but we're being quite cautious around new capital allocations into China. And principally focused on progressing the significant pipeline of existing development projects.
I think there are 38 development projects ongoing, in the mainland, exclusively in tier one and tier two cities, staying where we know the market best, and focusing on progressing existing opportunities. In relation to disposals, we regularly, and with some discipline, review our business interests, looking for whether they are yielding as we would expect them to, whether there are growth prospects, the competitive dynamics around them and the scale of the moats around those businesses. Obviously, I'm not gonna comment on individual prospects and businesses, but we do that in a very disciplined way on a regular basis as part of our ongoing capital allocation priorities.
As John highlighted, there were sort of two or three businesses that we thought ultimately we could see better value in exiting them than we could in remaining in them. But in general, we see a portfolio of good, strong businesses that we want to invest in. And so further divestments are, I would characterize, as pruning around the edges rather than wholesale uprooting.
And maybe I'll take a question as it builds. This is a question from Jayden Vantarakis from Macquarie: How does management view the Zhongsheng investment? Initially, the logic for raising scale was sound, but profitability has declined. How much of this does management believe is cyclical, or is there any structural element with the lineup of vehicles, BEV ramp up in China? I suppose the answer is, I think we see both elements at work, which makes it particularly a challenging environment. It is true that Zhongsheng is predominantly, let's say, 80% in the luxury side of the automotive business, and as such, it has been more protected, despite its fall in earnings, its earnings are still substantial.
It has been more protected against some of the real headwinds, particularly at the level of the middle class consumer in China. Nonetheless, I think the overall market is affected by the cyclical downturn of the Chinese economy, and Zhongsheng is certainly a part of that. So we see those pressures have contributed to less sales in the new car side. Now, having said that, there are structural issues, very significant structural changes going taking place and have already taken in place with the rise of the BEVs. To date, the BEV, predominantly, the penetration has been much more significant at the lower and middle end, and therefore have had much more modest effect at the luxury end. This is where companies like BYD have come from.
At the same time, we have seen the traditional manufacturers, the luxury manufacturers, like Mercedes-Benz, themselves launch EV products into the market. Now, I think what will play out over these next few years, if I say, the take-up of EV from the original manufacturers, like Mercedes-Benz or the newer entrants, like BYD, have been relatively small. We don't see that that is going to be sustained. We see EV or hybrid EV vehicles will begin to make traction in the luxury side. Conversely, we think that the traditional manufacturers of Mercedes are now in a much stronger position than they have been to bringing in good products that are relevant for the China market at decent costs.
And I think ultimately, as we would say, as the owner of Mandarin Oriental, a brand at that luxury sector is very important and very difficult to build, and I think Zhongsheng will maintain its very strong representation and relationships with these traditional luxury OEMs. Now, at the same time, I think the automotive market is one of the most volatile, one of the most interesting just at the moment, and I think Zhongsheng in its presentations have laid out a strategy that really looks and leans into the opportunity of a lot more EV brands coming into the market.
Rather than focusing on building a business model out of new car sales, which was its traditional model, its focus now is to build after-sales capabilities, a network of after-sales and collision repair centers that are essentially brand agnostic, that cater to the after-sales needs of all the new EV players, and also recognizes that for many of the new entrants into the market, frankly, after sales or accident repairs are not necessarily key priority items, when you're in the market fighting for new car market shares. So I think Zhongsheng has recognized that opportunity and is beginning to build out that opportunity, but that is very much at an earlier phase.
The contribution in 2023, and indeed in 2024, remains focused on more of its, the existing business, and that we will be watching both the cyclical trends, ideally, moving in the right direction, but equally, watching new car models being introduced on the EV side.
I think, I think the only thing I'd add, John, is that clearly the cyclicality in the short term has been important. The analyst forecast for 2023, that we've based our results on, are still bringing a bigger contribution from Zhongsheng than back in 2019. There was a huge roller coaster in 2020, 2021, where supply restrictions, margins pushed up. Supply constraints pushed margins up to record levels, and we've come back down from that level. As John said, there's a lot more competitiveness with the entry of new, strong, BEV players. But with the strong focus on used car sales, growth opportunities, service opportunities, and aftersales opportunities, and their broad-based network, and I would say, I think the openness of many of the domestic OEMs in China to working with strong partners, I think Zhongsheng has a good platform for growth.
Whether the market has bottomed out just yet or not, only time will tell, but we remain strongly positive on the strong long-term growth prospects at Zhongsheng.
I have another question here, but I'm going to look first to-
Hi, this is George Choi from Citi. A few questions, if I may. Firstly, very encouraging to see the share buyback that you've done at the public parent company level and also at the individual company level. Would you please remind us if you have any specific share buyback mandate at, again, the holding company level versus individual company level? That'll be my first question. My second question is on gearing. So it's gone up to 15% by the end of last year. Even though that's a very enviable level, in my opinion, that seems to be trending towards a different direction versus your previous guidance of getting back to pre JS privatization levels.
I'm just wondering if that's just a blip this year, or does it signal that you are becoming more comfortable with leverage? And lastly, specifically on Jardine Restaurants. So this recent trend of Hong Kong people spending their weekends in Shenzhen is having a negative impact on your business at the restaurants. Anything you can do to perhaps reverse the trend on the top line? Or is more stringent cost control the only way to reduce losses there? That's all for me. Thank you.
Graham, why don't you-
Thanks, Jeff. Yes, I'll start. There are no existing public mandates around buybacks at JM level. As we've communicated a few times, what we're picking up is principally with a view to neutralizing the effect of scrip. And we picked up a little bit more than that last year as we clearly saw some weakness in the share price. At the back end of the year, we went a little bit below the bare minimum of what would have been required to pick up to cancel scrip. So we don't do it on an extremely strict arithmetic basis, but that is the overriding principle for what we're doing with that. And we, you know, we plan to continue.
Clearly, at current share prices, there is some opportunity for us there to drive some return to shareholders, albeit not changing our main reason for working. On gearing, yes, it has nudged up a little bit. As I tried to explain, that's principally through the deployment of capital at Astra and elsewhere in the group, we have continued, and with some velocity, bringing net debt down. And I would say that obviously, Astra being in a net cash position and with clear commitments to support Indonesia's just transition and move away from dependency on coal. As well as sort of important investment opportunities, they took those means and they deployed them to significant new investments, both organic and inorganic, to drive future and long-term growth.
That has an effect on our consolidated net debt position, but both the parent and pretty much all the listed subs, we continue to see ourselves going down. There is still investment capacity at Astra. And so the arithmetic of exactly where our group gearing percentage ends up will be a little bit beholden to what opportunities, what investment opportunities continue to present themselves. We are, as a group, still very much committed to low gearing, very conservative balance sheets, and continuing to build flexibility. We don't want to sit on big cash piles. We do want to have the flexibility to invest where we need to, and where the right opportunities arise, to drive future long-term growth.
Doing that, particularly as interest rates have moved up, and uncertainties abound in the short term, is very much consistent with our intent to continue to be a low-geared business and organization. So no change in our perspectives or philosophy there.
I suppose you could add in there that, that debt, net debt at a consolidated level, a little bit a mechanical function-
It is
... given the enhanced dividends also being paid-
From Astra
... during the year, which would have affected that.
Yeah.
Maybe in terms of the restaurant group, sort of an excellent question, and one I've asked the Chief Executive of the Jardine Restaurant Group as well. I think the answer is, of course, there is operational efficiencies. There is, of course, rent reductions, no small rent reductions, to be had in terms of the business generally. Conversely, the real focus is on revenue, the customer proposition. This is a customer proposition. Habits have changed post-COVID, be they in terms of the mix of at home dining or in restaurant dining, and of course, the Shenzhen effect, post-COVID as well.
So the key part of that business is to ensure that its proposition to customers, again, becomes relevant. That doesn't mean costs will be ignored, but it very much requires a customer proposition revenue focus, rather than a cost focus. I've just been shown a sign at the back, the sort of last question I'm gonna take-
If I may, John, just one thing.
Yeah.
I think it has to be both on JRG.
Yeah.
We have to focus on growing revenue, but we of course continue to have to focus on the cost base. You know, Hong Kong is a very challenging market to operate QSR restaurant. We believe we do so very well, and we benchmark very well against regional peers. But getting the revenue growth and presenting customers with exciting opportunities is important. Managing the cost base effectively is important as well.
Another question from abrdn, Sean Teng. DFI Retail has gone through many years of restructuring. With that in mind, what changes in the refreshed DFI strategy give confidence in a turnaround? Could you share the key management KPIs of DFI? I think really starting with that last part, this is essentially the KPIs and what's most important in the DFI Retail Group is really long-term performance. With that in mind, the targets, the KPIs, are very much total shareholder returns, return on capital employed, in each of the DFI retail businesses. And that, by the way, is backed up by a long-term incentive plan that is being put into place.
I think that is hugely important to, as ever, align the interests of the shareholders and the leaders of the business. Of course, there are short-term KPIs, as ever, with retailers, a mix of sales and margin and new store growth. But frankly, this is a question of focusing on the long-term value accretion that this business we're looking to provide. I think the first part of the question is a perfectly reasonable question, indeed, again, one that we ask ourselves internally. I think it's true that many years of restructuring can lead to a certain degree of restructuring fatigue. But I think this strategic drive forward one is built on progress made in the last restructuring exercise.
I think a lot of the basics of the business, sort of, that were problems coming into 2018 and 2019, have been fixed. I think there's a lot more focus on the merchandising, the opportunities of own brand, a comprehensive online functioning. And I make a very general answer, but it really depends on each of the individual businesses. So that is there. Now, if you look at the numbers, I suppose, in 2022, difficult to see any of what I've said, because there was such significant disruption, particularly in the core market of Hong Kong in DFI's business. But I think we concluded it was very much there. So we build on that.
And I suppose I could talk about, again, the rightness of the strategy, the importance of having the right leaders and team, of which we have confidence, the analysis that they've done. But again, I would sort of come back to the idea, to execute the strategy well, you need alignment between the leaders and the shareholders. We believe we have that with these LTIPs that are being put into place. With that, I think we have to conclude our session for this morning. Many thanks to you joining online, and many thanks equally to those of you who've taken the time to be with us here in the 49th floor of Jardine House. Thank you very much.